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Independent counsel steps up probe of Samsung’s bribery allegations

The independent counsel team is speeding up its probe into whether Samsung paid kickbacks to President Park Geun-hye and her longtime friend Choi Soon-sil in exchange for backing the merger between its construction arm Samsung C&T and marketing subsidiary Cheil Industries last year.

According to local news reports Monday, the counsel team has secured significant evidence and testimony that former Welfare Minister Moon Hyung-pyo had ordered the ministry’s affiliated organization National Pension Service to side with the merger.

The controversial merger between Samsung’s two affiliates was completed in September last year with support from Samsung C&T’s largest shareholder NPS, despite strong opposition from the US activist hedge fund Elliott Management.

The NPS voted in favor of the merger in July last year without convening a special committee consisting of professional outside advisors -- the usual practice when making a big investment decision.

The special investigation team said it also secured evidence that Moon had ordered the NPS not to convene the special committee for the deal. 



The merger, which allegedly brought about a loss of 590 billion won ($500 million) to the NPS, has been deemed as being key to Samsung Electronics heir apparent Lee Jae-yong’s succession. The deal allowed Lee and his family to secure a 30 percent stake in Samsung’s de facto holding company Samsung C&T.

The independent counsel is also looking into whether Choi pressured the NPS to side with the merger through President Park in return for financial support provided by Samsung.

A month after the NPS voted for the merger, Samsung Electronics reportedly pledged to give 22 billion won to Widec Sports, a Germany firm set up by Choi. Samsung Group was also found to have donated 20 billion won to the Mir and K-Sports foundations, which were also set up by Choi, through several of its affiliates.

On Monday, the independent counsel team summoned the former chief of NPS’ fund operation division Hong Wan-sun, who met with Lee on July 7, four days before the NPS backed the deal. The counsel team said it found some evidence during a raid on Nov. 21 that the NPS “abnormally” sided with the merger despite knowing the deal would bring about significant losses to its fund.

The special investigation team also raided more than 10 houses of officials allegedly involved including Moon Hyung-pyo, former welfare minister and current head of the NPS. 

By Shin Ji-hye (shinjh@heraldcorp.com)
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