S.Korean Conglomerate Chiefs Grilled By Lawmakers For Presidential Scandal

December 06, 2016

Chiefs of South Korea's major conglomerates on Tuesday attended the first parliamentary hearing for a scandal involving President Park Geun-hye, being reminiscent of the 1988 interrogation of chaebol heads over the country's deep-rooted collusive links between politicians and businessmen.

Samsung Electronics Vice Chairman Lee Jae-yong and Hyundai Motor Chairman Chung Mong-koo, heads of South Korea's top two conglomerates, were summoned as witnesses to appear before the National Assembly's special investigative committee.

Attending the hearing that is being broadcast live were Lotte Group Chairman Shin Dong-bin and SK Group Chairman Chey Tae-won, two of the country's top five conglomerates.

Also put in the attendance list were LG Group Chairman Koo Bon-moo, Hanwha Group Chairman Kim Seung-yong, Hanjin Group Chairman Cho Yang-ho and CJ Group Chairman Sohn Kyung-shik.

GS Group Chairman Hug Chang-soo participated in the capacity of chief of the Federation of Korean Industries (FKI), local business lobby group.

Lawmakers grilled the family-run conglomerate heads over whether to have donated tens of millions of U.S. dollars to two nonprofit foundations controlled by Choi Soon-sil, President Park's longtime confidante, in return for receiving or anticipating business favors.

It is rare here to see chaebol heads appear and be interrogated in the unicameral assembly. The latest parliamentary hearing over corruption between chaebol chiefs and the country's chief executive happened in late 1988.

At the time, opposition lawmakers having a majority seat quizzed Chung Ju-yung, the founder of all Hyundai groups, and other conglomerate heads, over the corruption scandal involving former military strongman Chun Doo-hwan who ruled the country until early 1988.

Chun forced key conglomerates to donate a large sum of money to a nonprofit foundation presumably owned by him. The FKI, or lobby group for conglomerates, served as a collector of donations.

The lobby group acted again as a broker by relaying President Park's order and request to the businesses and collecting contributions. "It was difficult to refuse orders and requests from the presidential office," said Lee Seung-cheol, FKI vice chairman, at the parliamentary hearing.

Reversing his past comments in the parliament, the FKI vice chief repeatedly said "yes" on questions about whether to have collected contributions on the presidential office's order. He added Park's office intervened in details in the establishment of the Choi-controlled foundations.

The main target of legislators was the vice chairman of Samsung Electronics, the crown jewel unit of Samsung Group, the country's biggest conglomerate. Its founding family has been criticized for controlling overall group subsidiaries with a handful of equities through the complicated web of cross-shareholdings.

Samsung is suspected of making the biggest donations to the foundations in return for support from the national pension fund in last year's controversial merger of Samsung C&T and Cheil Industries to create the group's de-facto holding company.

Lee denied the allegation, saying the merger "has nothing to do with the transfer" of management control to him from his father Chairman Lee Kun-hee who has been hospitalized for about two and a half years on heart attack.

He said Samsung's donation was not made to receive any business favor or support, noting that President Park just asked for the donation to flourish culture and develop sports during his face-to-face meeting with the president.

In July last year, President Park held an open meeting with major conglomerate heads and met separately one-by-one with some of the chiefs. Lee admitted that he had met privately with President Park twice in July last year and in February this year.



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