The Korea Herald

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Scandal-hit companies cautious but relieved over interim probe results

By Korea Herald

Published : Nov. 20, 2016 - 17:44

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South Korea’s major conglomerates on Sunday remained cautious, but relieved upon the prosecution’s announcement of its interim probe results, which officially named President Park Geun-hye as an accomplice, but did not treat their vast donations as bribes.

The businesses, including Hyundai Motor and Samsung Group, minimized their official comments, citing the ongoing investigation. A total of 53 companies are found to have given a combined 77.4 billion won ($66.5 million) in donations to the Mir Foundation and K-Sports Foundation, two organizations allegedly run by Choi Soon-sil, a friend of President Park who is at the center of the scandal.

The prosecution said that it has concluded for the time being that Choi and An pressured Hyundai Motor to give 6.2 billion won worth of projects to Playground Communications, an ad agency run by Cha Eun-taek, an associate of Choi. In response, the company reportedly said that there was a request from then presidential secretary An Chong-bum, who is now under arrest. He is accused of abuse of power and coercion.

“An said, ‘Review this,’ while handing us some type of brochure. How can a company ignore such (a gesture). The benefits that returned to the company, meanwhile, wasn’t significant,” a company official was quoted as telling Yonhap News.

The company also reportedly said that out of the 6.2 billion won, most of the sum was spent as expenses to publish their advertisements in the media and that only some 1.3 billion won went into the agency.

The prosecution also said that Choi and An abused their power to arrange an absorbent manufacturer run by Choi’s associate to supply 1.1 billion won worth of products to the company.

Young-ryeol, chief of the Seoul Central District Prosecutors’ Office, speaks during a press briefing on Sunday. (Yonhap) Young-ryeol, chief of the Seoul Central District Prosecutors’ Office, speaks during a press briefing on Sunday. (Yonhap)


As for Posco, the prosecution said that Choi and An are suspected of threatening an ad company that was selected as a preferential bidder for Posco’s former affiliate Poreka to hand over 80 percent of its shares. The attempt later failed. Posco refused to comment and said that it would faithfully respond to the prosecution’s investigation.

KT, meanwhile, was also mentioned in the interim probe report that said Choi was allegedly involved in high-level personnel appointments of the company.

The company reportedly said that it was difficult to comment on the matter as all persons involved have already resigned.

KT was investigated in relation to hiring two executive-level officials responsible for placing advertisement orders and allegedly giving 6.8 billion won worth of projects to Playgound.

Lotte Group, meanwhile, heaved a sigh of relief as the prosecution did not tie the conglomerate with bribery in relation to its donation of 7 billion won to the K-Sports Foundation, allegedly set up by Choi.

The prosecution, instead, specified that they suspect Choi and An to have abused their power to force Lotte Group to donate 7 billion won to build an integrated sports facility in Hanam.

Lotte has maintained that it was a victim to such pressure.

The 7 billion won, however, was found to have been returned by the foundation to the group during a time that coincides with the prosecution’s separate search and seizure of the conglomerate over embezzlement charges.

In relation to Grand Korea Leisure, a casino operator under the Korea Tourism Organization, the prosecution said that Choi and An are suspected of forcing it to launch a sports club for the disabled and arranging for The Blue-K, a company allegedly set up by Choi to funnel money, to sign exclusive contracts with the member players.

While the prosecution did not specify whether there was any attempt of bribery by any of the company, it said it would continue to look into relevant suspicions.

Samsung, whose name did not appear in the prosecution’s report, have been suspected of sending 3.5 billion won to Widec Sports, a company in Germany run by Choi. The prosecution said during a question and answer session that they plan to continue looking into this suspicion.

CJ Group is also involved in the allegation that the presidential office pressured for the resignation of the company’s Vice Chairwoman Lee Mi-kyung, along with suspicions regarding the K-Culture Valley project. CJ E&M is suspected of receiving special favors from the Gyeonggi Provincial Government in winning the business rights for the construction of the 1.4 trillion-won theme park.

The prosecution did not specify CJ in its Sunday report. (khnews@heraldcorp.com)