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Samsung, Hyundai Chiefs Questioned as Scandal Grips South Korea

Friday, 9 December 2016

samsung scandal

SEOUL—The heads of South Korea’s biggest conglomerates face questioning beginning Tuesday about their close ties with government officials, as an investigation into a political scandal encircling the president reaches more of the country’s top corporate names.

Lawmakers from a parliamentary committee will question leaders of several business groups, including Samsung heir apparent Lee Jae-yong and Hyundai Motor Chairman Chung Mong-koo, about their companies’ donations to two foundations allegedly controlled by a friend of the nation’s president.

The intensifying political crisis is causing some of South Korea’s conglomerates—known as chaebol—to shelve or change their plans, and has prompted prosecutors to investigate already-completed deals.

The scandal surrounds Choi Soon-sil, a confidante of President Park Geun-hye, accused of using her political ties to solicit chaebol donations for two foundations she allegedly controlled. Some of the money, prosecutors believe, went to pay for Ms. Choi’s affluent lifestyle and her daughter’s equestrian aspirations. Both Ms. Park and Ms. Choi deny the accusations.

Samsung Electronics Co. said last week that it was considering a broader restructuring, but would put off any decision for at least six months. Samsung has attributed the delay to the legal, tax and regulatory complexity of any restructuring. But analysts said it was unlikely that Samsung could push ahead with any changes given the paralysis in government, whose unofficial support is often sought for major changes. (In some cases, government backing is necessary as government-run banks or agencies own stakes in the companies.)

Samsung also delayed its annual year-end executive shuffle until 2017 because of uncertainty stemming from the political scandal, according to a person familiar with the matter. Last month, prosecutors searched Samsung’s offices in Seoul, in the third seizure of documents from the group’s offices in recent weeks, and summoned Mr. Lee and at least two other top executives for questioning. The executives couldn’t be reached to comment on the investigation, and Samsung declined to comment.

chung-mong-koo

 

In the most recent search, prosecutors swept the Samsung headquarters in Seoul. At the same time, prosecutors raided the offices of the National Pension Service—the largest shareholder in many of South Korea’s biggest companies. The pension fund last year cast a decisive vote in favor of a merger of two Samsung affiliates that strengthened Mr. Lee’s control of Samsung Electronics Co.

Source by: Internet

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