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The Korea Herald
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THE INVESTOR
March 29, 2024

Samsung

We’re gonna sue: National Pension Service

  • PUBLISHED :April 30, 2018 - 15:50
  • UPDATED :May 02, 2018 - 11:01
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[THE INVESTOR] The National Pension Service said on April 30 it may sue the former government officials who supported a controversial merger between two Samsung units -- Samsung C&T and Cheil Industries -- three years ago despite knowing the fund would lose money.

“The NPS is considering a compensation lawsuit,” the state-run pension operator said in a report handed to lawmakers who requested it to come up with measures to make up for losses caused by the merger.



Related:
Ex-health minister sentenced in Samsung scandal
NPS may apologize over its vote for Samsung merger in 2015


The pension fund is also planning to launch a probe to find out why top officials backed the merger, and how to prevent similarly controversial incidents in the future.

The NPS had backed the merger even with the knowledge that it would incur billions of won of losses from the deal. Later, a special prosecutorial counsel said the fund lost around 138.7 billion won (US$129.77 million).

Industry watchers say the pension fund apparently wants to clean up its image by taking such steps. 

“The NPS is looking for a way to make amends and distance itself from the criticism that it supported the Samsung merger at the risk of losing Koreans’ retirement money,” said one legal source on the condition of anonymity.

The 2015 deal was cited as an important step for succession from bedridden Chairman Lee Kun-hee to his son Jae-yong at Korea’s largest conglomerate. Due to the 1:0.35 swap ratio under which one Samsung C&T share was exchanged for just 0.35 share in Cheil Industries, the Lees were able to grab more stake in C&T, which more or less controls most of the important Samsung units, including Samsung Electronics.

The NPS, on the other hand, is said to have lost billions of won from the deal, according to the local courts and Singapore-based proxy adviser ISS.

Former Health Minister Moon Hyung-pyo, and former NPS CIO Hong Wan-seon, among others, are suspected to have flexed their muscles to get the NPS to approve the tie-up. Moon and Hong are currently facing a Supreme Court trial.

Elliott Management -- the third largest shareholder of Samsung C&T with a 7.12 percent stake at the time -- gained much exposure in Korea when it fiercely opposed the merger on grounds that it would undermine the value of C&T’s stocks.

By Kim Young-won (
wone0102@heraldcorp.com)

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