The Korea Herald


[News Focus] Betraying for money or hiding another scandal?

By 김후란

Published : June 8, 2011 - 18:26

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Seomi director says Samsung still owes her 53 billion won

Are the once-best-and-strongest partners in the local art scene turning their backs on each other or starting yet another scheme together?

Gallery Seomi director Hong Song-won, arrested May 6 for money laundering, filed a law suit worth 5 billion won ($4.6 million) against Hong Ra-hee, director of Leeum, Samsung Museum of Art and wife of Samsung Electronics Chairman Lee Kun-hee, and the Samsung Foundation of Culture.

The Seomi director is accusing Hong Ra-hee and the Samsung Foundation of Culture of only paying 25 billion won out of 78.1 billion won for 14 works of art purchased from August 2009-February 2010, according to Seoul Central District Court on Tuesday.

Her sudden accusation has stirred flurry of speculations not only because it is hard to believe that a Samsung organization may have dragged out the payment for more than a year but also because the two Hongs had a long-time close relationship. 
(Left) Hong Ra-hee, director of Leeum, Samsung Museum of Art (Leeum, Samsung Museum of Art)(Right) Hong Song-won, director of Seomi Gallery (Park Hae-mook/The Korea Herald) (Left) Hong Ra-hee, director of Leeum, Samsung Museum of Art (Leeum, Samsung Museum of Art)(Right) Hong Song-won, director of Seomi Gallery (Park Hae-mook/The Korea Herald)

The Gallery Seomi director usually dealt with the ladies of the chaebol families and Leeum director was her biggest client. Ever since the Leeum director visited Christo Javacheff’s exhibition at Seomi Gallery in the early 1990s, Seomi’s Hong almost exclusively recommended and sold pricy artworks to the Leeum director. During the Samsung scandal in 2008, the focus was on whether Roy Lichetenstein’s “Happy Tears” belonged to Samsung or the Seomi director. Samsung‘s Lee was charged with tax evasion in 2008 and was given a three-year suspended jail term. Leeum’s Hong was accused of buying the painting with the Samsung Group’s slush fund and resigned in the aftermath of the scandal. Lee resumed his post at Samsung March last year and Hong at Leeum three months ago.

The list of art work sales, submitted by Seomi’s director to the court, includes U.S. artist Willem de Kooning’s 1975 work “Untitled VI” (31.3 billion won), British artist Francis Bacon’s 1956 work “Man Carrying a Child” (21.6 billion won) and another British artist Damien Hirst’s contemporary work “Bull’s Head” (6.45 billion won).

However, she did not submit specific documented evidence with the complaint. Han Bong-jo, an attorney from the law firm of Songbaek, who is representing Hong Song-won, said that there was no special reason for requesting the payment of only 5 billion won at this time.

“I cannot discuss the reasons for not having sent in the specific data along with the complaint or when the data will be sent,” he said.

Samsung Foundation of Culture said that it could not confirm whether it had actually 53.1 billion won in outstanding bills or if it currently has the artworks involved.

“The complaint has not officially arrived yet. It is known to normally take about one to two weeks. We will confirm everything after examining the complaint,” said Park Min-seon, a PR official at Leeum.

Just for money?

Some art insiders allege that the Seomi director’s accusation that Hong Ra-hee and Samsung Foundation have not paid for the artworks may be a desperate move to at least retrieve her money, as her reputation has already hit bottom because of her involvement in yet another slush fund scandal.

Seomi’s Hong was arrested last month for laundering slush funds of the business conglomerate Orion Group. Hong is accused of having received 4 billion won in slush funds from Orion last year and buying several pieces of art for them, concealing the illegal funds and evading tax.

“She could be attempting to drag down Samsung with her, hoping to get the unpaid money. In that case, she is probably thinking that her relationship with Samsung is over,” said an official at a gallery in Samcheong-dong.

How payment is made for artworks differs according to galleries, but in most cases, the buyer should deposit about 20 to 30 percent upon making the contract and pay the rest before the artwork is actually delivered.

“When dealing with big galleries or regular customers, however, galleries often first give out the artworks and let them have time to consider, and then conclude the deal when they say ‘yes.’ It is possible that some misunderstanding happened during such a process. Director Hong Song-won is known to usually say ‘Take your time to make the payment,’” said an official at another Samcheong-dong gallery.

But some point out that there is only small possibility that the payment was not made at the time of the purchase because Seomi Gallery bought the artworks overseas. Unlike in South Korea, most overseas galleries do not deliver the artworks unless the payment is complete. Art insiders also doubt that Seomi’s Hong had the financial resources to pay for the works herself without Leeum’s Hong.

Start of another art scandal?

Some alleged that there could be more to the story -- like an attempt to conceal another Samsung slush fund discovered during the investigations of Seomi Gallery’s funds -- as Hong Song-won, who is known to make all her deals very low-key, is making this case very public.

“Payment processes are done quickly in general, and Samsung is very clear and prompt about it. There has been no problem regarding payment processes with Samsung Foundation of Culture so far,” said a gallery director who had sold artworks to the foundation.

“It is hard to imagine forming a slush fund at a company level because these days everything is so transparent. If the unpaid amount was not found in the accounting records, the artworks could have been bought by the owner family, not by the company, but they just classified it that way,” said an official at a Samcheong-dong gallery.

Seomi Gallery has been mired in many art-related scandals since 2008 starting with the Samsung scandal the same year, the 2009 National Tax Service scandal in which Han Sang-ryule, the ex-NTS chief was indicted for bribing his predecessor with artist Choi Wook-kyung’s pricy artwork “Hakdong Village,” and the recent Orion case.

Some say that it is too risky a thing to sue Hong Ra-hee and Samsung Foundation of Culture.

“This is unexpected. It is hard to think that a figure so well known could have played such a game,” said a gallery director, referring to Hong Song-won.

The overall opinion in the art world, however, is that the string of art scandals is bruising local art market.

“Every time it happens, the art market shrinks and its credibility falls. Artworks gain a reputation as slush funds themselves and the public regards art as something negative … It is a pity,” said an Itaewon gallery director.

By Park Min-young (