After obtaining a tip that Samsung Securities was systematically removing evidence related to allegations that the conglomerate maintains an extensive system of slush funds, the prosecution conducted an unexpected raid on the offices of Samsung Securities and two other affiliates on November 30.

The raid continued for seven hours until three p.m. and another raid was made on Samsung Securities computer center in Gangnam and Samsung SDS data center in Gwacheon in the afternoon.

Prosecutor Kim Soo-nam said that the raids were necessary in connection with its alleged management of slush funds using borrowed name accounts, adding that the prosecution had secured related documents and computers.

The prosecution confiscated eight large boxes of documents from the headquarters of Samsung Securities during the raid, which involved six prosecutors and 40 investigators. The confiscated materials included data stored in executives’ computers as well as documents possibly related to the slush fund and other stock transactions, according to the prosecution.

Kim said that a raid on Samsung SDS data center was aimed at securing backup information in the event that Samsung Securities employees had deleted data from their computers.

The prosecution said that it had found information showing that Samsung systematically had destroyed evidence in advance of investigations by the prosecution and special counselors appointed to the case. “We have obtained information that the stock securities firm is systematically destroying evidence related to the allegations that Samsung Securities has managed a slush fund created by Samsung affiliates using fake accounts under the name of its executives,” said a prosecution official.

Regarding this, an executive of a Samsung subsidiary speaking on the condition of anonymity, said, “Since last week, the company’s data processing team has hidden all computer hard discs,” indicating that Samsung has begun a broad and systematic destruction of evidence.

Samsung Group did not make an official statement about the raids.

Allegations against Samsung Group were first brought to light by Kim Yong-cheol, who formerly served as the conglomerate’s director of legal affairs. In addition to airing charges that the conglomerate was holding secret accounts in the names of its executives to bribe government officials, members of the legal community and the press, Kim divulged new evidence last week that Samsung had created slush funds via agreements made in 1994 between subsidiaries of Samsung Corporation and Samsung SDI located in South Korea, London, Taiwan and New York.

In an interview with the news weekly Sisa In, Kang Bu-chan, who was once worked at a Samsung SDI purchasing team, said that he was involved in the creation of an overseas slush fund from 1992 to 1999 at Samsung SDI, adding that the amount of the funds he either created himself or witnessed in creation was over 300 billion won (US$325.9 million).

According to the news weekly, Kang had data showing that he raised approximately 80 billion won through Samsung SDI Worldwide and Samsung Japan in 1993, about 30 billion won through the New York and London branches of Samsung SDI in 1995 and about 50 billion won while building a factory in Brazil from 1998-99.

Kang signed the contract between Samsung Corporation and a Samsung SDI branch in Taipei that Kim Yong-cheol disclosed at a November 26 press conference.

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