April 20, 2024

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[THE INVESTOR] South Korea’s top business heads are on full alert as they face a tough parliamentary hearing on Dec. 6 over their alleged connections with the presidential corruption scandal.

The chiefs of eight conglomerates including Samsung, Lotte, SK and CJ are expected to testify before the parliament’s special committee, which consists of 18 members, half from the ruling party and the rest from opposition parties. 

One of the key issues they will be grilled on is Samsung’s alleged attempt to push the National Pension Service to exercise its voting rights in favor of the merger between the two Samsung affiliates - Samsung C&T and Cheil Industries in July, 2015. The NPS had shares in both.

Lee Jae-yong, vice chairman of Samsung Electronics, is expected to be questioned on whether the merger ratio of 1:0.35 between Samsung C&T and Cheil Industries was fairly calculated.

Samsung’s headquarters had been raided by the prosecution over its donation to Mir and K-Sports foundations controlled by President Park Geun-hye’s confidante Choi Soon-sil.

The parliamentary session is likely to aim to clarify whether the NPS’ approval of the two Samsung affiliates served as a reason for Samsung to make hefty donations to Choi’s foundations. The group is also suspected of offering financial assistance to Choi and her daughter through a company run by Choi in Germany.

Lawmakers are also expected to zero in on whether former Samsung C&T intentionally avoided receiving new orders to artificially lower the stock price before the merger, and whether the NPS could have avoided investment losses before its decision.

Lotte chairman Shin Dong-bin will be called into explain about whether Shin’s one-on-one meeting with Park earlier this year is linked to Lotte’s attempt to win back the duty-free license that it had lost in 2015.

Lawmakers are also expected to question him over why and how Lotte’s additional donation of 7 billion won to K-Sports was later returned.

SK’s Chey Tae-won will also be questioned over the group’s attempt to win back a duty-free shop license, while CJ co-Chairman Sohn Kyung-shik will face questions over whether he lobbied for the presidential pardon of his nephew and CJ Chairman Lee Jae-hyun.

Hyundai Motor’s Chung Mong-koo is expected to testify on the suspicion that the conglomerate gave 1 billion worth of contracts to a company owned by a parent of a friend of Chung Yoo-ra, the daughter of Choi Soon-sil.

All conglomerates have denied any wrongdoing in relation to their donations.

By Kim Yoon-mi/The Korea Herald (yoonmi@heraldcorp.com)