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Korean Conglomerates’ Heads Deny Bribery Allegations Involving President's Confidante
Business Tycoons’ Denials
Korean Conglomerates’ Heads Deny Bribery Allegations Involving President's Confidante
  • By Jung Suk-yee
  • December 7, 2016, 02:00
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Lee Jae-yong, vice chairman of Samsung Electronics, said Samsung's donation was not made to receive any business favor or support, at the National Assembly hearing for a scandal involving President Park Geun-hye and her longtime confidante Choi Soon-sil.
Lee Jae-yong, vice chairman of Samsung Electronics, said Samsung's donation was not made to receive any business favor or support, at the National Assembly hearing for a scandal involving President Park Geun-hye and her longtime confidante Choi Soon-sil.

 

The leaders of nine major Korean conglomerates on December 6 attended the first National Assembly hearing for a scandal involving President Park Geun-hye and her longtime confidante Choi Soon-sil with no government position and pledged to eradicate deep-rooted collusive links between politicians and businessmen.

In regard to the scandal, the collusion between politics and business is considered the root cause. As politicians call on the Federation of Korean Industries (FKI), which came under fire for urging conglomerates to donate money for the establishment of two private foundations controlled by Choi – the Mir and the K-Sports Foundation, to dismantle, Samsung, SK, LG and Hyundai Motor said they would withdraw from the nation’s most powerful lobby group for business interests.

The chaebol chiefs denied outright allegations that they had contributed to the two foundations in return for favors. In particular, Samsung Electronics Vice Chairman Lee Jae-yong said he would disband the Future Strategy Office, the powerful control tower of Samsung Group, in the National Assembly hearing.

Attending the hearing as witnesses were Samsung Group Vice Chairman Lee Jae-yong, Hyundai Motor Group Chairman Chung Mong-koo, SK Group Chairman Chey Tae-won, LG Group Chairman Koo Bon-moo, Lotte Group Chairman Shin Dong-bin, Hanwha Group Chairman Kim Seung-youn, Hanjin Group Chairman Cho Yang-ho, CJ Group Chairman Sohn Kyung-shik and GS Group Chairman Huh Chang-soo who also leads the FKI.

Lawmakers of the ruling and opposition parties sequentially questioned the heads on allegations such as the donation to the Mir and the K-Sports Foundation, the merger of companies, the selection of duty-free business licenses and the request for pardon. They did not hesitate to make an intense criticism to chaebol heads that they are the accomplices of the unhealthy links between business and politics and governmental mismanagement. The politicians also said, “This hearing should be a starting point to reveal chaebol’s bribery charges and end the collusive links between politicians and businessmen.”

The leaders of the groups said at the hearing, “We will never let down the people in the future. We will make every effort to make a better business.”

They also dismissed all suspicions with regard to the influence-peddling scandal involving Choi Soon-sil and her daughter Chung Yoo-ra for receiving business favors from the Park government. SK Group Chairman Chey Tae-won and Lotte Group Chairman Shin Dong-bin said, “We didn’t donate money to seek favors in our business.” LG Group Chairman Koo Bon-moo said, “It is a reality that businesses are forced to follow the government policy.” GS Group Chairman Huh Chang-soo also said, “It is difficult to refuse orders and requests from the presidential office.” CJ Group Chairman Sohn Kyung-shik said, “Cho Won-dong, former senior presidential secretary for economic affairs, pressured former CJ Group Vice Chairwoman Lee Mi-kyung to resign.”

Lawmakers fired more than half of questions at Lee Jae-yong, vice chairman of Samsung Electronics, at the hearing as expected. Since it was rare to see Lee make long comments in public, it drew public attention as well.

Lee admitted that he met privately with President Park for 30 to 40 minutes on July 25 last year for Samsung’s special support to Choi’s family. However, he said Samsung's donation was not made to receive any business favor or support. In regard to last year's controversial merger of Samsung C&T and Cheil Industries, he said, “The merger ratio cannot be decided arbitrarily. It is decided according to the capital markets act.”

Regarding to the FKI, which raised money to establish the Mir and the K-Sports Foundation, Lee also said, “I will not personally work with the FKI in the future. Samsung will stop making a contribution, separately from membership fees, to the FKI.”

As Samsung, a key member which accounts for a considerable part in the FKI’s budget, has practically announce to leave the business lobby group, the FKI will have difficulties in operation, according to industry sources. The annual budget of the FKI amounts to 50 billion won (US$42.7 million) and Samsung pays 11 billion won (US$9.39 million), the biggest portion of it. Hyundai Motor and SK also pay 6 billion won (US$5.12 million) each, while LG pays 5 billion won (US$4.27 million). When Samsung, SK and LG withdraw from the group, the status of the FKI will fall greatly. In regard to Lee’s comment, Samsung Group said, “It was his personal comment,” but it hasn’t announce its official stance yet.

The FKI is a non-profit independent organization which consists of Korea's major conglomerates established by Samsung founder Lee Byung-chul in the early 1960s in time with a military coup by former President Park Chung-hee, father of the incumbent President. With Samsung Chairman’s official announcement to stop involving in the FKI’s activities, there is a possibility that FKI will be disbanded in the future. This is because other conglomerates will be affected when Samsung leaves the FKI. The chairman group of the FKI consists of heads of 19 business groups, including Hyundai Motor Group Chairman Chung Mong-koo, LG Group Chairman Koo Bon-moo, SK Group Chairman Chey Tae-won and Lotte Group Chairman Shin Dong-bin as well as Samsung Chairman Lee Kun-hee who is bedridden. However, LG Group Chairman Koo Bon-moo hasn’t taken any part in the FKI since 1999. Previously, the collusion between politics and business is blamed as the root cause for the government mismanagement involving Choi Soon-sil, and some within political and social circles call on the FKI, which is suspected of collecting money to set up the the Mir and the K-Sports Foundation, to dismantle.

Meanwhile, the opposition party said that it needs to verify the fact at the parliamentary hearing that chaebols made donations to establish the Mir and the K-Sports Foundation in return for favors in businesses in order to clear up the causal relationship of bribery, which is included in the parliamentary impeachment bill of President Park.