April 23, 2024

• 

[THE INVESTOR] Concerns are growing among South Korean businesses after political parties agreed on Nov. 22 to call in eight conglomerate heads to December’s parliamentary hearings over the scandal involving President Park Geun-hye and her longtime friend Choi Soon-sil.

Samsung Electronics’ Vice Chairman Lee Jae-yong will be summoned to testify alongside the chairmen of LG, Hyundai Motor, SK, Lotte, Hanwha, Hanjin and CJ. The business heads are suspected of having made donations to the Mir and K-Sports foundations run by Choi after separately meeting with President Park in July of last year. 

President Park Geun-hye and 17 chiefs of local conglonerates pose at the kick-off event of creative economy centers nationwide, a state-run startup accelerating program, in July last year.

This is the first time that business tycoons, including the heads of the nation’s top five conglomerates, have been summoned by the National Assembly. Most chiefs are likely to attend the hearings considering the growing public sentiment against the corporate-political nexus exposed through the Choi scandal.

A source from Samsung said on the condition of anonymity, “There is no way for Lee not to attend the hearings. If he is absent -- while the other heads are present -- the public might view Samsung as having something to hide.”

An anonymous official from Hyundai said, “Although there may be some variables, it is hard not to attend the hearings considering the strong public sentiment.” 

Still, they are concerned over how their chiefs should respond to the thorny questions expected from the opposition lawmakers, bracing to leverage the hearings in their intensified call for the president’s impeachment. It has been a rare sight for any conglomerate heads, who commonly keep a low profile, to answer questions on live television.

“Unlike a closed investigation, the parliamentary hearings are burdensome for businesses as the negative portrayal of the heads on TV may damage brand reputation,” said an executive from one of the major conglomerates.

“We face the dilemma as it is neither easy to keep answering ‘I don’t know’ nor to disclose every detail in public,” he added.

However, despite such concerns, experts say the conglomerate heads should face a public investigation in order to break the longtime vicious circle of politics and corporate connections.

“It is only natural for the heads to come out in front of the public and explain the facts if their companies are involved in some scandals,” said Professor Chun Sung-in of Hongik University.

“It is not right to define the companies as victims, as some companies such as Samsung and SK are alleged to have provided the donations in return for something such as M&A or chiefs’ imprisonment,” he added.

Korea’s largest pension fund, the National Pension Service, is being suspected of having been in favor of the merger between Cheil Industries and Samsung C&T last year after Samsung vowed to donate to the Mir and K-Sports foundations. 

By Shin Ji-hye/The Korea Herald (shinjh@heraldcorp.com)