Samsung Group, pension fund offices raided in growing S.Korea scandal
YOUKYUNG LEE | AP | Published — Wednesday 23 November 2016
SEOUL, South Korea: South Korean prosecutors investigating a corruption scandal surrounding the country’s president and her friend raided on Wednesday a unit of the country’s largest business group, Samsung, and the national pension fund, as public outrage grows over Samsung’s alleged link with the scandal.
Officials at Samsung Group and National Pension Service confirmed investigators visited their offices in Seoul.
The Investment Management Office of the world’s third-largest pension fund was the target of the raid, according to an NPS official who declined to be named, citing office rules.
Samsung spokeswoman Lim Bomi declined to say which Samsung department was raided.
Prosecutors at the Seoul Central District Prosecutors’ Office did not return calls seeking comment.
The raids took place as the political fallout from the scandal continued to grow after prosecutors charged Choi Soon-sil, President Park Geun-hye’s long-time friend, and two of Park’s top aides.
Also Wednesday, South Korea’s presidential office said the justice minister and senior presidential secretary for civil affairs had offered to resign. The president has not accepted their resignation offers, it said. Park has been refusing to meet prosecutors who said she conspired in criminal activities with the confidante and she need to be questioned.
While Park faces mounting calls to resign over the scandal, public anger has also been simmering toward Samsung as well because of its alleged links with Choi.
It is not the first time Samsung has been raided by prosecutors investigating the scandal, and South Korean reports say that the simultaneous raids of Samsung and the pension fund showed that the investigation was expanding to the contentious Samsung merger.
South Korea’s Yonhap news agency reported earlier that prosecutors were looking into whether the presidential office played a role in the pension service’s vote to support the controversial merger of two Samsung companies last year.
Samsung narrowly won shareholders’ approval to merge Samsung C&T and Cheil Industries in July 2015.
Most investors and analysts questioned Samsung’s argument that the deal was to create synergies between a Samsung construction firm and another Samsung firm that ran an amusement park and fashion businesses.
The merger deal was crucial for Samsung heir Lee Jae-yong who held a small stake in Samsung Electronics. It helped Lee, a grandson of Samsung founder and a vice chairman at Samsung Electronics, strengthen his grip on the group’s crown jewel, Samsung Electronics, without spending his own money.
Shareholders who opposed the merger, including US hedge fund Elliott, said the deal unfairly benefited Samsung’s founding families while hurting minority shareholders.
In the end it was National Pension Service, a major shareholder at both Samsung C&T and Cheil Industries, which played the role of king maker in the shareholder vote. The pension fund cast a vote in support of the merger even as some outside advisers recommended it oppose the deal.
The pension fund came under scrutiny for how it reached the decision to support the contentious merger. Public anger has been growing in recent weeks after one estimate showed that the value of the pension fund’s stake in Samsung C&T, the merged entity, fell by hundreds of millions of dollars.
In response to the allegations that the pension fund yielded to the pressure from the presidential office to support the deal, the National Pension Service said its decision was based on its independent review of the effect of the deal in line with its own policies.