Investigation of Samsung reveals traces of evidence destruction

Posted on : 2008-01-28 11:08 KST Modified on : 2008-01-28 11:08 KST
Shredded documents, modified data and office renovation lead to another Everland warehouse search

The investigation into Samsung Group hit a new level after the first traces of evidence that Samsung Fire & Marine Insurance, a non-life insurance unit of Samsung Group, destroyed audit documents and other financial records before the prosecution raided its offices on Friday in connection with an ongoing investigation into allegations that it helped the nation’s largest conglomerate to create slush funds with customers’ money.

A special investigative team, which is carrying out an investigation into the Samsung case, continued its work yesterday, combing through 107 boxes of documents gleaned from the offices of Samsung Fire & Marine Insurance for evidence. In the afternoon, it summoned a vice president of Samsung Corp. for questioning on whether he was involved in making bank accounts using borrowed names.

The special team is currently investigating allegations that Samsung and its affiliates created a network of slush funds which were then used to bribe government officials and other influential figures in exchange for business favors. Prosecutors suspect the funds were created via a number of illegal accounting practices, with one of the main suspicions being that the names of its top executives were used to create dummy bank accounts in which the slush funds were hidden.

The raid came after the investigative team received a tip-off from a former Samsung Fire official, sources said. During the search, it reportedly found a massive amount of destroyed documents in shredding machines and evidence that electronic financial data had been modified or computers replaced just a day before the raid.

Also found were traces of evidence that Samsung Fire had hastily renovated an office on the 22nd floor of its building. Investigators suspect the office was the hiding place for a secret safe that held money used for bribes.

The existence of the safe was alleged by Kim Yong-cheol, the former chief of Samsung’s legal affairs department who came forward last fall with allegations against the group. His allegations have become the basis for the current investigation being conducted by a specially appointed independent counsel and a team of special investigators.

Failing to obtain the necessary evidence in the Friday raid, the special investigative team searched a document storage facility in another building owned by Samsung Fire and located near Everland, Samsung’s family theme park in Yongin, south of Seoul, on Saturday. Sources close to the team said, however, that “Few materials were found in the search.”

Of the evidence secured at the document storage facility, the team is concentrating on data filed from 1999 to 2002. An informant who said that he had been responsible for the creation of slush funds during that period reported that the bank accounts related to the slush funds he had created had been specially marked.

The investigative team also arrested four Samsung Group executives, including Jeong Ki-cheol, Samsung’s chief financial officer, during the raid on January 25. The four are charged with having used unpaid insurance money to create another series of slush funds and are prohibited from leaving the country. Jeong, like other executives, has denied that bank accounts created in his name were used to hide slush funds.

Those arrested also include Won Jong-woon, executive managing director of Cheil Industries, Inc., and Park Gi-seong, executive managing director of Samsung Corp., both of whom were questioned about their involvement in creation of the dummy bank accounts.

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