[Analysis] What is the real dubious relationship between Samsung and Choi Sun-sil?

Posted on : 2016-11-09 18:43 KST Modified on : 2019-10-19 20:29 KST
Prosecutors have raided Samsung over ties to Choi, and turmoil could complicate transfer of group control to Lee Jae-yong
Members of Banollim
Members of Banollim

With prosecutors launching their investigation into Samsung, attention is turning to the scope of the dubious relationship between Samsung and Choi Sun-sil, President Park Geun-hye’s confidante and unofficial advisor, and between Samsung and the Park administration. This raid is the first Samsung has faced since a special prosecutor’s team searched Samsung’s Restructuring Office (today known as the Future Strategy Office) in 2008. It’s also the first time that Samsung’s headquarters in Seocho has been raided.

Sources at Samsung are troubled by the fact that the group’s Future Strategy Office -- which serves not only as the group’s control tower but also as the secretariat for Samsung Vice Chairman Lee Jae-yong – was included in the raid. Prosecutors not only seized documents from the office of Park Sang-jin, chief of external affairs at Samsung Electronics, on the 27th floor of Samsung HQ, but also from the Future Strategy Office on the 40th floor of the same building. Prosecutors reportedly targeted the offices of the planning team and of key executives at the Future Strategy Office. They believe that Samsung as a group has been “handling” Choi Sun-sil and her daughter Jung Yu-ra.

It is no surprise that investigators are targeting Samsung. Other chaebol are linked to Choi through their donations last year to the Mir and K-Sports Foundations, but a growing pile of evidence shows that Samsung’s ties with Choi go back even further than that. Some believe that Park Sang-jin’s appointment as the head of the Korean Equestrian Association in Mar. 2015 was a stratagem to allow Samsung to provide “legal” support to Choi’s daughter Jung.

Samsung Electronics claims that it paid consulting fees for taking care of horses and training athletes because it was the company employing the chair of the Korean Equestrian Association, but prosecutors are focusing on the fact that the money went straight to Choi’s company without passing through the Korean Equestrian Association. Some news reports even suggest that Park met Choi on a trip to Germany.

“I had heard rumors that Choi was a heavyweight, but I had no idea that she was so powerful. Samsung always seems to be one step ahead,” said a source at one chaebol.

The fact that several of the figures who have been mentioned or who are under suspicion in this scandal are former executives at Samsung makes things even more awkward for the group. One of these people is Song Sung-gak, former president of the Korea Creative Content Agency. Song, who is believed to be linked to former cultural creation conversion headquarters director Cha Eun-taek and who was arrested on Nov. 7 on charges of extortion and bribery, used to be an executive director for Cheil Worldwide, which is a Samsung subsidiary.

Also raided was Hyun Myung-kwan, chair of the Korea Racing Authority (KRA). Hyun served first as chief of staff for Samsung Electronics Chairman Lee Kun-hee and then as chairman of Samsung C&T. After becoming the chair of the KRA in 2013, he was rumored to be one of the likely candidates to become Blue House Chief of Staff.

The tension is palpable at Samsung, since Samsung Electronics Vice Chairman Lee Jae-yong was appointed registered director at the company during an extraordinary general meeting of stockholders held in October. Depending on which tack the prosecutors take in this investigation, efforts to ensure a smooth handover of management control to Lee could be adversely affected. “The hurricane is upon us,” said a source at the Samsung Group.

By Lee Wan and Choi Hyun-june, staff reporters

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

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