hankyoreh

Samsung Group helped Lee Jae-yong, the heir apparent and son of Chairman Lee Kun-hee, to increase his wealth with money deposited by customers at its financial affiliate, the civic group Solidarity for Economic Reform claimed yesterday.

“In November, 1998 when Lee Jae-yong sold all 300,000 Cheil Communications shares, Samsung Fire & Marine Insurance rapidly purchased 150,000 shares of the advertising affiliate. This is proof that the company tried to sustain the share price of Cheil Communications,” Solidarity for Economic Reform said.

That purchase brought Samsung Fire & Marine Insurance’s stake in Cheil Communications to 9.72 percent, which is a violation of state regulations, under which a conglomerate’s financial subsidiary is not allowed to hold more than a 5-percent stake in a non-financial company, the civic group alleged.

“It would be a breach of trust if the company had known of the sell-off by Lee Jae-yong at the time,” it added.

The claims are based on an analysis of Samsung documents which were disclosed by the nation’s largest conglomerate on November 12, the civic group said. According to the documents, Lee Jae-yong purchased 299,375 shares in Cheil Communications in March and April of 1996 for between 5,000 won and 10,000 won apiece. They were listed on the stock exchange in March 1998, and Lee put his stake up for sale in November of the same year, making an estimated 12.6 billion won (US$13.7 million) in profits.

Kim Sang-jo of the civic group said, “Samsung Fire should explain why it abruptly purchased Cheil Communications shares when Lee Jae-yong sold his, though it didn’t hold shares in the advertisement firm until late 1997.”

The civic group also urged the Financial Supervisory Service to provide an explanation for why the violation was not revealed during a 2004 industry-wide investigation.

Meanwhile, the Samsung documents also revealed that Lee allegedly purchased shares in Samsung S-1 and Samsung Engineering for below-market prices and made 27.1 billion won and 26.4 billion won each by selling the stakes after the two companies went public, the civic group claimed.

A brokerage fund manager said, “There were rampant rumors at the time that Samsung’s financial affiliates tried to boost the prices of Lee Jae-yong’s shares with customer money.” He continued, “The share prices of these companies soared even when the broader index suffered setbacks.”



Please direct questions or comments to [englishhani@hani.co.kr]