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Mir Foundation

The nature of chaebol support to President Park Geun-hye’s confidante and influence-peddler Choi Sun-sil is becoming the focus of attention as prosecutors’ investigation of the Choi scandal expands to the companies that gave her money.

While most of the chaebol that funded the establishments of the Mir and K-Sports Foundations are now crying foul about their “victimization,” tensions are mounting over the possibility that some could face punishment on bribery charges depending on the nature and form of support given.

Business observers are classing transactions between Choi and the chaebol into three main categories. The first is “insurance,” unavoidable payouts made even when the companies saw the support request as improper. A number of the 18 groups that contributed to the two foundations could be seen as falling in this category.

“How many corporations are going to refuse a demand from the Blue House?” asked a senior executive at one of the top-ranked groups, all of which provided funding to the foundations. “They’re worried they’re going to suffer some disadvantage at some point if they don’t comply with the demands of the powers that be. How can we be punished when we’re doing it unwillingly?”

People’s Party floor leader Park Jie-won previously claimed Hanjin Group chairperson Cho Yang-ho was run out of his seat as organizing committee chair for the 2018 Pyeongchang Winter Olympics after refusing a K-Sports Foundation request for a donation of one billion won (US$874,000).

Second is logrolling, where support was made to achieve specific aims. Booyoung was found to have made a request to former Blue House Senior Secretary to the President for Policy Coordination Ahn Jong-beom in February asking him to turn down the heat with a tax audit in exchange for 7 billion won (US$6.1 million) in support to the K-Sports Foundation. With rumors rife about an investigation by prosecutors, many say Lotte’s motives in complying with a late May foundation request for 7 billion won can’t be seen as entirely pure. CJ first provided active support in 2014 for a Dokdo project orchestrated by Choi’s ex-husband Chung Yoon-hoi; since then, it has done so for a number of projects spearheaded by Choi and director Cha Eun-taek. Its actions raise the question of whether the goal was to win a pardon for chairperson Lee Jae-hyun, who was previously found guilty on corruption charges. Lee ultimately was given a special Liberation Day pardon in August of this year. Observers are also saying SK’s offer to give 3 billion won (US$2.6 million) in response to a request for 8 billion (US$$7.0 million) last February was made for the sake of currently jailed vice chairperson Chey Jae-won.

The third category is collusion, where corporations sought longer-term, farther-reaching gains through preferential support to Choi over more concrete gains in the near term. The best example may be Samsung, which was found to have supplied the most funding of all chaebol to the Mir and K-Sports Foundations - 20.4 billion won (US$17.8 million), or 26% of all funds raised - and to have provided 3.5 billion won (US$3.1 million) through a consulting contract last year with Widec Sports, a private companies set up by Choi in Germany. The one billion won spent on buy a racehorse for Choi’s daughter Jung Yu-ra was reportedly part of that payment. While Jung’s equestrian course in Germany was ostensibly bought by stationary company Monami, many suspect Samsung was behind the purchase. After insisting that it “knew nothing” about the various allegations raised to date, Samsung responded to concrete charges emerging from the prosecutors’ investigation by belatedly offering the unsatisfying explanation that it had “offered support as chair company for the Korea Equestrian Federation.”

In a Nov. 3 statement, the civic group People’s Solidarity for Participatory Democracy said, “The fact that Samsung was the only chaebol to make additional donations to Choi directly without going through a foundation leads one to reasonably suspect the possibility of collusion between Samsung and the powers that be.”

“The third-generation succession to power of vice chairman Lee Jae-yong is something that would have been difficult without the protection and tacit consent of those in power,” the group added.

By Kwack Jung-soo, business correspondent

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