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Samsung Group Nervous with Lee Jae-yong Summoned as Bribery Suspect
Samsung in Trouble
Samsung Group Nervous with Lee Jae-yong Summoned as Bribery Suspect
  • By Cho Jin-young
  • January 13, 2017, 02:00
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On January 12, South Korean special prosecutors summoned Samsung Electronics vice chairman Lee Jae-yong as a bribery suspect.
On January 12, South Korean special prosecutors summoned Samsung Electronics vice chairman Lee Jae-yong as a bribery suspect.


Samsung Electronics vice chairman Lee Jae-yong was summoned by special prosecutors on January 12 for allegations that he offered a bribe to Choi Soon-sil and her family.

After an investigation, the team of special prosecutors led by Park Young-soo is planning to determine whether or not to apply for arrest warrants for the Samsung executives including the vice chairman regarded as being involved in the scandal while expanding its investigation to cover other conglomerates that invested a large sum of money in the MIR Foundation, the K-Sports Foundation, etc. Under the circumstances, the Samsung Group is nervous about any possible management setback. Likewise, the entire business community is anxious about the expansion of the investigation.

It is said that the special prosecutors’ focus will be laid on when the vice chairman first met Choi Soon-sil and whether he was directly involved in the group’s decision to offer her money. The special prosecutors are currently assuming that the Samsung Group gave tens of billions of won to her and her family, who are the closest acquaintances of President Park Geun-hye’s, in return for the National Pension Service’s support for the recent merger between Samsung C&T and Cheil Industries that was essential for the vice chairman to take control of the group.

The special prosecutors are also planning to delve into whether he lied at the recent hearing on the Choi Soon-sil scandal.

After the investigation, they are going to determine the scope and intensity of the judicial proceedings to be applied to Samsung CEOs and presidents such as Choi Ji-sung and Jang Chung-ki.

If the vice chairman is arrested, the Samsung Group cannot avoid some hiatus in terms of management. At present, the group is at a loss for what to do with regard to personnel rearrangement, overseas investment, business strategy formulation and so on.

With the situation as it is, the other South Korean conglomerates are paying close attention to the special prosecutors’ next targets.

It is said that the next targets will be the SK and Lotte Groups. The former is known to have offered money to the MIR and K-Sports Foundations to get chairman Choi Tae-won out of jail and the latter is regarded as having done the same thing in return for a favor during the course of duty-free shop licensing for business in Seoul.

SK chairman Choi Tae-won was given a special pardon on August 15, 2015 after spending 31 months in jail for embezzlement. In November 2015 and February to April 2016, the SK Group transferred 6.8 billion won and 4.3 billion won to the MIR Foundation and the K-Sports Foundation, respectively.

According to insiders, the special prosecutors have a taped record regarding their collusion, the content of the tape includes a conversation between the chairman and vice chairman Kim Yeong-tae that was made days ahead of the pardon, and the vice chairman informed the chairman during the conversation of the pardon in return for the offering of the money.

The SK Group, in the meantime, is denying the allegations. “The investment in the foundations was made by not only SK but also all the major conglomerates including Samsung, Hyundai Motor, LG and Lotte and vice chairman Kim Yeong-tae mentioned investment, not bribes, during his conversation with the chairman,” it said, adding, “The purpose of the pardon was economic revitalization and the investment in the foundations, which was an allotment similar to a quasi-tax, was in return for nothing.”

The Lotte Group is denying any connection between its money transfer to the foundations and its selection as a duty-free store operator in Seoul, too. Lotte had to shut down Lotte World Tower Duty Free in November 2015 after failing to pass licensing examinations. However, the South Korean government announced in April last year that it would provide additional duty-free shop licenses for three conglomerates and Lotte made the cut last year.

“It is true that President Park Geun-hye had a one-on-one meeting with chairman Shin Dong-bin in March last year,” Lotte mentioned, continuing, “However, the plan for the additional selection was already made public at that time and, as such, it is hard to tell that our investment in the foundations was for special favors.”