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Samsung heir's reputation suffers as trial continues

Samsung Electronics Vice Chairman Lee Jae-yong on Thursday attended the second round of trials held to determine whether he and other Samsung officials asked for favors from former President Park Geun-hye in exchange for money given to her longtime friend Choi Soon-sil and her family.

The South Korean tech giant gave 44.3 billion won ($39.1 million) to organizations established by Choi and her aides, including a 13.5 billion won contract signed to support the overseas training of Choi’s equestrian daughter, including purchasing horses for her. The focal point of the trial was to discover whether Lee, the de facto leader of Samsung empire, had known about Choi’s veiled connection to Park and that Chung Yoo-ra, former member of the national equestrian team, was her only daughter.

Samsung Electronics Vice Chairman Lee Jae-yong (Yonhap)
Samsung Electronics Vice Chairman Lee Jae-yong (Yonhap)

Lee’s lawyer reiterated his earlier position that the vice chairman was not aware of Park’s relationship with Choi and that he had never asked the former president to clear the way for his succession. Samsung provided financial assistance to Choi’s organizations without strings attached.

Countering Lee’s claim, a team of special investigators unveiled a written statement by a former Samsung executive that he was told by Park Sang-jin, the former Samsung Electronics president for external affairs in July 2015, that Choi is a woman capable of exercising massive influence, that she is more close to Park than her own sister. That is how Samsung’s assistance, codenamed “Hamburg Project,” to Choi’s family had begun, he was quoted as saying by special prosecutors.

Of the billons of won offered to Core Sports, a company in Germany that signed the contract with Samsung, some was given to Chung’s boyfriend who was registered as a horse carer, Noh Seung-il, the former manager of the organization testified to the special counsel. Though he had no experience in horse training, he was paid for taking care of Chung‘s 11 dogs and three cats, Noh added, supporting the counsel’s claim that the money was delivered solely for Chung, not for her sports career.

Amid the fierce legal battle, Lee lost his board membership in Exor, the holding company of Fiat Chrysler Automobiles, raising questions whether the bribery charges he is facing have already damaged his reputation overseas.

On April 5, Exor Chairman John Elkann thanked board members -- including Lee -- whose membership has recently come to an end, without elaborating on why the positions were not renewed.

Lee was named an outside director of Exor in May 2012 and appointed again for a three-year term in 2015.

For the last five years, Lee maintained a close partnership with Elkann which constantly raised market expectations that their business relationship would have something to do with Samsung’s ambitions in automotive industry.

Samsung Electronics recently acquired Harman, a US company that specializes in car audio, for 9 trillion won in a landmark deal. Local reports also suggested earlier this week that Samsung has decided to buy Magneti Marelli, an Italian auto parts maker under FCA Group, and plans to complete the deal by the end of the year. Samsung declined to comment on the reports. The deal appears to be true, said a source familiar to matter.

By Cho Chung-un (