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THE INVESTOR
November 21, 2018
Big Reunion

The Boardroom

[ASSEMBLY HEARING] Tension, disappointment engulf largest hearing on chaebol

  • PUBLISHED :December 06, 2016 - 17:35
  • UPDATED :December 06, 2016 - 17:56
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[THE INVESTOR] The nation was glued to the television broadcasts on Dec. 6, as the country’s top chaebol owners sat in throng in front of the lawmakers at the National Assembly to face questions over allegations that they made secret deals with President Park Geun-hye and her longtime friend Choi Soon-sil in exchange of favor.

The nine conglomerate heads were bombarded with questions over their alleged cozy ties with politics and power, a topic that has mostly been considered taboo in a country where family-owned enterprises thrived under the supports of militant governments in the 70s and 80s.




At the center of the hearing was Samsung Electronics Vice Chairman Lee Jae-yong, who faced a barrage of questions on his weakest points from his alleged link to Choi to alleged irregularities over his accumulation of wealth through converted bonds and a merger between Samsung’s two affiliates last year.

But he was lashed out for evading answers by repeatedly apologizing for causing the public concern and said, on several occasions, that he feels a grave responsibility in the wake of the scandal.

“(Samsung) has never funded or supported (any organizations) seeking benefits in return,” said Lee, when asked by Rep. Lee Man-hee whether the tech giant’s donation was intended to secure his leadership and a smooth transfer of power from his bedridden father.

The heir apparent also denied allegations he requested Hong Wan-sun, the then head of National Pension Service’s asset management division, to approve a merger between Samsung C&T and Cheil Industries, a landmark deal widely seen as a way for Lee to secure more control over Samsung Electronics, the crown jewel unit of Samsung Group.

“The merger between the two companies had no relation to my succession. ... The meeting was made at the request of NPS, the largest (institutional) investors to Samsung affiliates,” he said.

On questions over the nature of Samsung’s massive donations to Choi and her family, the vice chairman denied his involvement in the case, and he wasn’t aware of who Choi and her daughter Chung Yoo-ra, a dressage rider who the group supported, were.

Lee also said he would stop supporting the Federation of Korean Industries, a business lobbying group accused of raising funds from businesses for the operations of the K-Sports and Mir foundations. Lawmakers also brought up the controversial issue of Samsung’s former employees at its semiconductor plants who died of leukemia, urging the vice chairman to take full responsibility.

In the emotionally charged hearing, Rep. Ha Tae-keung of the ruling Saenuri Party lashed out that the hearing itself is a reflection of the businesses maintaining their cozy ties with the state, pointing out that six of the nine chaebol owners who appeared were the children of former business leaders who testified at a parliamentary hearing 28 years ago.

In 1988, the National Assembly summoned chaebol leaders including then-Hyundai Group Chairman Chung Ju-young over their roles in raising funds for the Ilhae Foundation launched by former President Chun Doo-hwan.

Tycoons who took the stand Tuesday were Hyundai Motor Chairman Chung Mong-koo, son of Hyundai Group founder Chung, Hanwha Group Chairman Kim Seung-youn, Lotte Group Chairman Shin Dong-bin, Hanjin Group Chairman Cho Yang-ho and SK Group Chairman Chey Tae-won. The list also included Sohn Kyoung-sik, co-chairman of CJ Group, LG Group Chairman Koo Bon-moo and GS Group Chairman Huh Chang-soo, who was summoned as the head of the FKI.

Most were questioned on the motives behind their donations, or whether there was any coercion directly from the president.

The responses were mostly kept short as they were seen trying to avoid any incrimination.

Some of the questions by the lawmakers were seen veering off-topic.

Lotte’s Shin, for instance, was questioned as to whether his group should be considered Japanese or Korean.

The hearing was held with dozens of protestors protesting outside the National Assembly building. The protestors holding signboards called to imprison Lee Jae-yong for inflicting losses for NPS, a state-fund operator and accusing conglomerates are “accomplices” to the nation’s biggest influence-peddling scandal.

“The key point of the hearings should be to break out the politics and corporate nexus. Conglomerates are accomplices as they gave briberies to President Park,” Ahn Jin-geol, a member of a civil group dubbed a special commission for arresting conglomerates, told The Korea Herald.

Professor Chun Sung-in of Hongik University said the chaebol owners’ acknowledgement of offering money to organizations related to Choi is subject to a bribery charge.

“Although they said they were not aware of that (the money being linked to Choi), this should be investigated for full disclosure,” he said, citing a 1997 Supreme Court ruling that stipulated money given to the president or his or her associates is subject to a bribery charge.

By Cho Chung-un and Shin Ji-hye/The Korea Herald (christory@heraldcorp.com) (shinjh@heraldcorp.com)

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