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The Korea Herald
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THE INVESTOR
March 29, 2024

Samsung

[IMPEACHMENT] Special investigators put Samsung merger at center of Choi probe

  • PUBLISHED :December 21, 2016 - 17:25
  • UPDATED :December 21, 2016 - 17:42
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[THE INVESTOR] The independent counsel team looking into the corruption scandal surrounding President Park Geun-hye and her longtime friend Choi Soon-sil kicked off its official investigation on Dec. 21, putting a controversial merger between two Samsung affiliates at the center of its initial probe.

Investigators of the special counsel raided the National Pension Service’s asset management office in Seoul, the Ministry of Health and Welfare in Sejong and residences of executives involved in last year’s merger between Samsung C&T and Cheil Industries.




Lee Kyu-cheol, a spokesperson for the special counsel team, told reporters that the raids were carried out to secure evidence to prove allegations that Choi was bribed in exchange for approval by the NPS for the Samsung merger.

The counsel zeroing in on the Samsung merger on the first day of the official probe appeared to indicate that the nation’s largest conglomerate holds a piece of the puzzle to prove not only Choi’s bribery charges but also Park’s connection to the massive kickbacks her friend received.

Choi is suspected of meddling in state affairs, interfering in the operations of companies for personal gains and forcing conglomerates to make donations to two organizations launched by her and her associates.

In addition to the massive donations to the Mir and K-Sports foundations, Samsung was the only conglomerate that also financially supported Choi and her family, through a paper company she established in Germany.

The team led by independent counsel Park Young-soo suspects that Samsung may have wanted to use Choi’s connection to President Park to pressure the NPS to approve the deal, widely known as a crucial step for the group’s de facto leader Lee Jae-yong to consolidate power.

Through a stock-for-stock transaction with a ratio of 1:0.35, Samsung C&T merged with Cheil Industries, despite strong opposition by individual shareholders led by US hedge Fund Elliott Associates.

Questions have remained over the approval by the NPS, as the decision came right after a review by an internal committee, not by an independent panel. There are also questions over the ratio of the merger, which was considered disadvantageous to Samsung C&T shareholders.

NPS was the largest institutional investor of Samsung C&T and is under the control of the Welfare Ministry. Before the merger, the NPS held an 11.6 percent stake in Samsung C&T and a 5 percent stake in Cheil Industries.

Choi Gwang, a former NPS chairman, recently revealed that he was pressured by Cheong Wa Dae, as he tried to fire Hong Wan-sun, then head of the pension fund’s asset management division.

Legal experts here said that the success of the probe centers on proving the nature of the relationship between Samsung and Choi and its relation to the NPS’ approval of the merger deal.

Before the official probe started, the investigators met Park Sang-jin, president of Samsung Electronics’ external affairs and Chang Choong-ki, president of Samsung Group’s future strategy office. The team has also imposed an overseas travel ban on Samsung Electronics Vice Chairman Lee Jae-yong, but has not yet decided to summon him for further inquiries.

Lee denied his acquaintance with Choi and that the donations made to Choi’s organizations and her family were not in return for favors.

Amid the deepening probe, heads of Samsung Group affiliates gathered for the last weekly meeting of the year.

They attended a lecture on the future of Korean economy and shared views on external and internal variables next year.

They declined to comment on the ongoing probe as well as the group’s direction for the new year. 

By Cho Chung-un/The Korea Herald (christory@heraldcorp.com)

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