» Hyun Myung-kwan, a former high-ranking executive of Samsung, on Jeju Island on April 10, when he announced that he has been keeping some 280,000 shares of Samsung Life Insurance Co. in dummy accounts under his name for Samsung Chairman Lee Kun-hee.

A former high-ranking executive at Samsung Group confessed on April 10 that he has kept some 280,000 shares of Samsung Life Insurance Co. under so-called borrowed name accounts and that the real owner of the shares is Samsung Chairman Lee Kun-hee. The Samsung chairman will be summoned again by the independent counsel, Cho Joong-woong, for questioning at 2:00 p.m. on April 11.

Hyun Myung-kwan, 67, who had served as chief secretary of the Samsung chairman’s office and chairman of Samsung Corp. before entering politics, revealed the information at a regional office of the ruling Grand National Party on Jeju Island. At present, Hyun is the head of the GNP’s provincial office in Jeju.

“I have said several times, including during the May 31 local elections, that I was the real owner of the stake in Samsung Life, but it’s not true,” Hyun told reporters. “I have held the 280,800 shares of Samsung Life in my accounts since 1988, when I was a senior executive at Hotel Shilla. In fact, I have held the stake in borrowed name accounts, and the real owner is the group’s owner (Chairman Lee Kun-hee),” Hyun said.

One of the allegations against Samsung is that the group used the bank and stock accounts of its senior executives to stash slush funds for the group. In South Korea, it is illegal for anyone to open an account in a name other than one’s own.

On March 23, the special prosecutorial team investigating into the allegations against Samsung said, “Of the 16.2 percent stake (3,344,800 shares) in Samsung Life owned by 12 current and former Samsung executives, 11 executives, excluding the late Samsung Life Chairman Lee Jong-ki, were confirmed to have shares for Chairman Lee Kun-hee under borrowed name accounts.”

When asked why he made the revelation at this late stage, Hyun said, “I had thought of revealing the information before the parliamentary elections, but decided to do so after the elections were over due to concerns about a possible setback for the party. I did not talk with anyone prior to revealing this information,” Hyun said.

Hyun is regarded as a veteran executive at Samsung and served the group in various capacities, including as the chief secretary in 1993; vice chairman of Samsung Corp. between 1996 and 2001; chief director of Samsung Medical Foundation in 2000; and chairman of Samsung Corp. between 2001 and 2006. In 2005, Hyun also served as vice chairman of the Federation of Korean Industries, the nation’s largest corporate lobby.

Meanwhile, Yun Jung-sok, a senior prosecutor on the special investigative team, said, “At the time of Chairman Lee’s first summons, there were some parts that weren’t investigated because probes into slush funds and borrowed name accounts were being conducted. When Chairman Lee is summoned again on April 11, we will question him intensively about the allegation that Everland convertible bonds were issued at below market prices,” referring to the charge that this was done in an effort to illegally transfer ownership of the group from the chairman to his son.

Regarding another, separate allegation that Samsung SDS issued convertible bonds at below market prices for the same purpose, Yun said, “As for Chairman Lee’s role, we will consider the possibility of punishment as we continue to investigate, but no decision has yet been made.”

Earlier in the day, the special prosecutorial team raided the headquarters of Samsung Electronics, including the offices of its finance team, computer services center and warehouse. “The raid was carried out to secure classified documents,” Yun said. After the special prosecutorial team tracked some 1,300 dummy accounts that had been opened at Samsung Securities, the team was believed to have confirmed that billions of won were deposited into the accounts of Samsung executives. The money was used to buy shares of Samsung Electronics and the stock dividends were remitted as cash. That is in contrast to explanations from Samsung that the money in the borrowed name accounts was inherited wealth belonging to the Samsung chairman and that no money had come from Samsung affiliates.

Asked by a journalist whether the raid on Samsung Electronics was related to the second summons of the Samsung chairman, Yun replied, “It could be so.”

On the same day, the special prosecutorial team summoned Samsung executives, who have been suspected of owning the Samsung Life shares under borrowed name accounts, for questioning.

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