The Korea Herald

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[News Focus] Samhwa chief accused of political lobbying

By 김소현

Published : June 6, 2011 - 19:08

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Despite checkered history, not much known about Shin’s connections


Prosecutors are zeroing in on Shin Sam-kil, the arrested honorary chairman of Samhwa Mutual Savings Bank, as they deepen the probe into savings banks’ irregularities.

Circumstantial evidence shows that Shin lobbied a number of politicians and senior government officials to save his troubled business, but very little is known about who Shin is.

Shin told his acquaintances that he was from Pohang, North Gyeongsang Province, but people from the area said they didn’t know him.

No one seemed to know where he hailed from or which schools he graduated from, although rumor has it that he attended the same middle school with former President Park Chung-hee’s son Ji-man. Ji-man is the younger brother of Rep. Park Geun-hye, currently the ruling Grand National Party’s strongest presidential hopeful who leads a minor faction within the party.

Shin established a gold importing company “Monaco” and a jewelry distributor “Golden Hill 21” in 1997 and 1998. He sponsored a golf tournament held by a broadcasting station and founded a team of professional golf players he recruited.

But a ruling party lawmaker based in Busan told a vernacular newspaper that he seemed to be smuggling gold.

In 2007, Shin was arrested and indicted for illegally collecting 25.4 billion won in value-added tax refunds through irregular trading of gold bars. Last year, he was given a three-year sentence suspended for five years and also a 15 billion won fine.

In 2004, he acquired Samhwa Mutual Savings Bank, which had branches in Seoul’s Gangnam and Sinchon areas, for 18 billion won ($16.7 million). The secondary bank’s assets grew to 1.39 trillion won by last January, just before its operation was suspended, but it is questionable how the small bank grew so quickly.

As honorary chairman of Samhwa, Shin approached dozens of influential figures including some relatives of President Lee Myung-bak, politicians belonging to the GNP’s pro-Lee majority as well as the pro-Park faction, the main opposition Democratic Party, leading businessmen and celebrities.

In 2009, Samhwa extended illegal loans to or “invested” in a small fledgling firm called Namu Equity so it could acquire an IT company named C-motech. Namu Equity is headed by Jeon Jong-hwa, President Lee’s nephew-in-law. Jeon is the son-in-law of Lee’s eldest brother Lee Sang-eun.

Shin invited Chung Jin-seok, currently presidential aide for political affairs, as an outside director in 2004, and met with Kwak Seung-joon, head of a presidential council, early this year.

Shin is also suspected of offering huge financial aid to Rep. Gong Sung-jin, a pro-Lee GNP lawmaker, through Gong’s younger sister. Gong is currently under prosecutorial investigation.

Shin is believed to be friends with Park Ji-man, brother of Park Geun-hye. Shin is likely to have approached members of the pro-Park faction through Park Ji-man.

Gong’s sister said she introduced Park Ji-man to Shin between 2003 and 2004, and the two grew very close since.

She was quoted as saying by the Chosun Ilbo that she became friends with Shin in 2002 when she was running an advertising consulting business.

Park Ji-man is believed to have introduced politicians such as Chung Jin-seok and high-profile businessmen such as Kolon chairman Lee Woong-yeul to Shin.

Park even visited Shin after he was arrested, and Park’s wife, a lawyer surnamed Suh, helped defend Shin, the Chosun Ilbo reported, citing an unnamed prosecution official.

The newspaper also reported that Shin is rumored to be very close to two pro-Park legislators.

One of them said he was on first name basis with Shin after getting to know him in a golf group, but had nothing to do with lobbying for the savings bank. The other lawmaker said he didn’t know Shin.

Shin is also said to have given about 100 million won to an assistant to former DP lawmaker Lim Jong-seok. The assistant surnamed Kwak admitted that he received about 3 million won each month for three years from Shin and used the money to pay interns and college student volunteers at the former legislator’s office until March 2008, just before Lim lost in the general elections in April 2008.

Gong’s sister claimed that she was paid a monthly fee of between 3 million and 5 million from Shin between 2005 and 2007 for her market research consulting service, but that this was misperceived as political funds to her brother.

By Kim So-hyun (sophie@heraldcorp.com)