hankyoreh

Reporters cover Samsung during a search and seizure operation by a prosecutors special investigative team

Prosecutors carried out a large-scale search and seizure of Samsung on Nov. 8, indicating that the most active corporate “supporter” of Choi Sun-sil is now the focus of a full-scale investigation.

The prosecutors’ special investigation headquarters, headed by Lee Yeong-ryeol, carried out surprise raids on nine companies and institutions on Nov. 8, including the Samsung Group’s Future Strategy Office, the Samsung Electronics external cooperation office, and the Korea Equestrian Federation (KEF). Their aim was to investigate allegations that the group gave 2.8 million Euros (US$3.1 million) in special support between September and October 2015 to Core Sports (now Widec Sports), a German corporation under the effective ownership of Choi and her daughter Jung Yu-ra. Targets include the office and home of KEF chairperson and Samsung Electronics president Park Sang-jin, as well as the Future Strategy Office, which serves as a secretariat for group vice chairperson Lee Jae-yong.

“This search and seizure was in connection with the 2.8 million Euros sent separately by Samsung to Ms. Choi. It has nothing directly to do with the contribution of 20.4 billion won (US$18.1 million) made by Samsung to the Mir Foundation,” a source with the prosecutors said.

“Only a portion of the Future Strategy Office was raided, as there are employees there connected with this case,” the source added.

Prosecutors reportedly obtained computer hard disk drives and various personal journals and documents, including materials on KEF duties and performance from use of the support.

While the 2.8 million Euros sent directly by Samsung to Choi and Jung was provided in the form of a ten-month consulting contract with Choi’s Core Sports, the amount was actually used by Choi and Jung for the purchase of a high-priced horse named “Vitana V” and off-season training for Jung, sources said. Prosecutors are also investigating allegations from a former Core Sports employee that payments of 800,000 Euros (US$881,600) were sent each month to Core Sports. In a telephone interview with a Hankyoreh reporter, the employee indicated that the 800,000-euro payments appeared in the account every month for the five to six month they worked at Core Sports. If true, this means Choi and Jung received as much as 10 billion won (US$8.9 million) in payments directly from Samsung.

Prosecutors are also focusing their investigation on what they see as a strong likelihood that Samsung used its partner company Monami in May to purchase the Rudolf Zeilinger riding center in Emsdetten, Germany, to support Jung, at a cost of 2.3 million Euros (US$2.5 million). Monami, which is currently listed as owner, had said the riding center has no connection with Jung - but prosecutors found she had recently had personal dressage training there on at least five occasions before the center had even opened. Despite both Samsung and Monami’s denials of any relationship between the center and Jung, it appears to have been used as a training camp for her.

as a “closed” sign hangs in the window at Samsung Electronics Headquarters in Seoul’s Seocho district

Prosecutors are also noting the overlap in time between Samsung’s efforts to purchase the center through Monami, which began in Sep. 2015, and Jung’s decision the same month to leave her first training site in Germany, the Jaegerhof riding center, and find another location. Monami is suspected of acquiring the riding center in exchange for a contract with Samsung worth 9.9 billion won (US$8.8 million). Monami has said it was unaware of Jung’s training, which “predated the transfer of ownership,” and that the overlap in time was “just a coincidence.” Monami sent notice of its intent to purchase in Oct. 2016, and ownership was transferred in October of this year after the signing of a contract in May.

Prosecutors suspect Samsung supplied the funds in the expectation of some form of benefits from Choi, who is a close confidante of President Park Geun-hye. A report on the SBS network quoted Robert Kuypers, business representative of the Hesse Equestrian Association and a former president of Core Sports, as saying he had “heard from Choi in the process of discussing the business plan with her that Samsung planned to give funds after getting a promise for cooperation on labor issues and government support for research expenses.” At the time Samsung was facing union opposition to the sale of Samsung Techwin and Samsung Thales to Hanwha. The period also coincided with changes in its governance structure, including the merger of Samsung C&T with Cheil Industries.

If Samsung was aware that Choi was actually the owner of Core Sports and made specific requests of her, she could be charged with influence peddling according to the Act on the Aggravated Punishment, etc. of Specific Economic Crimes. The crime is definite as “exchanging, demanding, or promising money, items, or benefits in correction with services related a government employee’s duties.” The key question in the end will be what kind of “services” Choi provided in terms of government duties. Prosecutors are planning to summon Park Sang-jin shortly to ascertain the nature of the funding.

By Lee Wan and Choi Hyun-june, staff reporters

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