Lawmakers’ grilling of tycoons centers on Samsung’s heir apparent

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Lawmakers’ grilling of tycoons centers on Samsung’s heir apparent


Heads of top conglomerates take oaths before testifying at a parliamentary hearing in the National Assembly in Seoul on Tuesday investigating the influence-peddling scandal involving President Park Geun-hye and her confidante Choi Soon-sil. [NEWSIS]

The heads of eight top business groups sat before lawmakers Tuesday in the largest parliamentary inquiry into big business in 28 years. They were questioned about their role in the far-reaching influence-peddling and abuse of power scandal involving President Park Geun-hye and her confidante Choi Soon-sil.

Sitting stone-faced before 18 lawmakers in a hearing room filled with journalists, corporate owners answered sharp questions about their contributions to two non-profit foundations founded and managed by Choi Soon-sil and whether they were made in return for business favors.

The eight business titans were Samsung Electronics Vice Chairman Lee Jae-yong; Hyundai Motor Group Chairman Chung Mong-koo; CJ Group Chairman Sohn Kyung-sik; SK Group Chairman Chey Tae-won; LG Group Chairman Koo Bon-moo; Lotte Group Chairman Shin Dong-bin; Hanwha Group Chairman Kim Seung-youn and Hanjin Group Chairman Cho Yang-ho. GS Group Chairman Huh Chang-soo also attended the hearing, but as chairman of the Federation of Korean Industries, which launched the Mi-R and K-Sports foundations and collected a total of 77.4 billion won ($67.1 million) in donations from 53 companies.

Samsung Electronics Vice Chairman Lee Jae-yong told lawmakers that he was asked by the president to contribute to the country’s cultural and sports sectors. He said he had two one-on-one meetings with the president.

At the center of attention is whether Samsung gave 20.4 billion won to the two foundations and deposited 4.3 billion won in a German account held by Choi to win the approval of the Park administration for its merger of Samsung C&T and Cheil Industries last year.

Samsung needed the approval of the National Pension Service (NPS) for a merger of the two affiliates at a ratio of 1:0.35. The merger was meant to consolidate Lee’s control over Samsung Group. If the NPS approved the merger last year because of the pressure from the Blue House, public reaction could be extremely negative. The NPS is a state-run body in charge of managing pensions for over 21.4 million people, almost half of Korea’s population.

The NPS held an 11.6-percent stake in Samsung C&T and a five-percent stake in Cheil Industries when it approved of the merger. The merger was opposed by some shareholders, who said the value of Samsung C&T was underestimated in the share value ratio of 1:0.35 with Cheil Industries.

Lee flatly denied his company made the contributions to Mi-R and K-Sports foundations in the hope of receiving a business favor.
“We received many requests for financial contributions from many sectors of society, including the culture and sports sectors. Never have I committed money in the hope of winning some favor. The same principle applied [for the Mi-R and K-Sports foundations],” said Samsung’s heir apparent, who repeatedly apologized for “causing concerns” to the people.

Lee’s testimony, however, didn’t seem to satisfy the lawmakers.

“We have testimony that proves that Samsung messed with people’s pension accounts held by the NPS to help its corporate ownership succession [for Lee Jae-yong],” snapped Rep. Park Young-sun of the Minjoo Party of Korea.

Rep. Youn So-ha of the People’s Party held a picket that read “Arrest Lee Jae-yong” with Lee’s picture on it that he said he had brought from a street rally protesting the Park government.

At times the lawmakers spoke to the business chiefs as though they were chiding children for bad behavior. The most aggressive questioning centered on Samsung chief Lee, who looked shaken at times while repeatedly saying he was deeply sorry for the trouble he had caused.

Lee said he had not been aware of his company’s 20.4 billion won commitment to the two foundations, saying he “had not been briefed” on it by his subordinates as they were small-scale projects.

The hearing, which began at 10 a.m., was adjourned at 12:30 p.m. for lunch. It is set to resume at 2:30 p.m.

Lee Jae-yong arrived at the National Assembly at 9:25 a.m., flanked by bodyguards and his close aides, as labor groups rallied near the entrance calling for his arrest.

One picket read that Lee should be jailed for inflicting damage on the NPS.

He was showered with questions as he rushed through the building, but did not offer journalists any remark.

All other chairmen arrived at the same spot within the next 20 minutes, adopting the same silent stance as Lee or saying only, “I will do my best,” a profession of modesty in the Korean language.

Kim Seung-youn, chairman of Hanwha Group, was the only one who wore an air of confidence, saying the hearing was a “good chance” to speak on behalf of his conglomerate, hinting of Hanwha’s innocence in any corporate wrongdoing.

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