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Chaebol chiefs deny bribery, say arms twisted

By Yeo Jun-suk

Published : Dec. 6, 2016 - 15:08

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South Korea’s top business tycoons on Tuesday rejected the notion their donations to two foundations controlled by President Park Geun-hye’s friend were bribes to the state head. Yet, some admitted the contributions were not 100 percent voluntary.

Nine business leaders, including Samsung Group’s heir and de facto chief Lee Jae-yong, faced feisty lawmakers at a parliamentary hearing at the National Assembly over their alleged involvement in the scandal swirling around the president and her friend Choi Soon-sil.

Despite being hailed as one of the biggest parliamentary inquiries in the country, with some of Korea’s richest people on the witness stand, the session provided little new information. Most of the tycoons spent their time denying allegations, eluding sensitive questions or just claiming to have no knowledge or memory.

“Samsung has never ever made any donation anticipating business favors in return,” Samsung’s Lee, the youngest of the tycoons in attendance, told lawmakers from the ruling and opposition parties during the session broadcast live on TV. 

Top business tycoons including Samsung Group Vice Chairman Lee Jae-yong (center) attend a parliamentary hearing on Tuesday. (Yonhap) Top business tycoons including Samsung Group Vice Chairman Lee Jae-yong (center) attend a parliamentary hearing on Tuesday. (Yonhap)
While admitting to having two exclusive meetings with President Park in July 2015 and in February this year, Lee contended the meetings had nothing to do with Samsung’s more than 20 billion won ($17.1 million) in donations to the Mir and K-Sports foundations -- now suspected to have been a cover for Choi’s embezzlement.

In the meeting, the president had asked for Samsung’s generous support for the nation’s cultural and sports scenes, Lee said. Core projects of the Mir and K-Sports foundations were for cultural exchanges and local sports development.

The Samsung Electronics vice chairman went on to dispute the allegation that Samsung may have received special treatment from the government -- the state-run National Pension Service’s support of the group’s much-disputed merger in particular -- in return for donations.

Lee said the merger between Cheil Industries and Samsung C&T, which was all over the news at that time because of US fund Elliott’s open campaign to block it, was never brought up in his meeting with the president.

NPS was the largest shareholder of the premerger Samsung C&T. The marriage of the two seemingly unrelated companies materialized thanks to the NPS’ support, widely viewed as helping cement Lee’s grip over the conglomerate.

“The merger of Samsung C&T and Cheil Industries was not for the succession of managerial rights,” Lee said. 

The Samsung heir, however, acknowledged having funded business projects led by the president’s friend Choi and her family members, but claimed the decisions were not “voluntary.”

“It was an unescapable situation for us,” said Lee.

Other attendees of the session -- heads of Hyundai Motor, SK, LG, GS, Lotte, Hanwha, Hanjin and CJ – also rejected bribery accusations in unison, but some of the tycoons admitted that their donations to the Mir and K-Sports foundations were not quite voluntary. 

“It is hard (for businesspeople) to snub a request from the government. That’s the reality in Korea,” said Hur Chang-soo, the chairman of GS Group who leads the Federation of Korean Industries, a lobbying body for big business.

LG Group Chairman Koo Bon-moo echoed the sentiment, saying, “Businesses have no choice but to comply with government policies.”

SK Group Chairman Chey Tae-won said his group’s contribution to the foundations run by Choi was done in accordance with a quota set by the FKI.

Lotte’s Shin Dong-bin refuted the prosecution’s claim that the group’s decision to donate 7 billion won -- on top of the 4.5 billion won it had already given to the two foundations -- was at the direct request from the president.

Prosecutors investigating the scandal surrounding President Park have said the group’s additional support was the outcome of a closed-door meeting between the president and Shin in March this year. 

“That (Park’s request) didn’t happen,” the businessman said, while admitting to having met the president. 

The parliamentary investigation also shed light on the generous support that conglomerates provided to Chung Yoo-ra, the dressage rider and daughter of the president’s friend. Earlier, it was revealed that Chung rode a horse that was worth nearly 1 billion won and was purchased by Samsung.

Samsung’s Lee, asked about the group’s 10 billion won in support for Choi’s daughter and sports business interests, said: “It was not right. I want to say nothing but sorry.”

Rep. Jang Je-won of the ruling Saenuri Party said that Hanwha Group, whose chief Kim Seung-youn chaired the Korean Equestrian Association until March 2015, provided Chung two horses worth a total 800 million won, which the Hanwha boss claimed to have no knowledge of. Hanwha Group later denied the allegation.

By Yeo Jun-suk (jasonyeo@heraldcorp.com)