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A staff member enters the National Pension Service offices in Seoul’s Gangnam district during a raid by a special prosecutors’ team on Nov. 23. (by Shin So-young

The special investigation team composed of prosecutors probing the Choi Sun-sil influence-peddling case abruptly raided the South Korean National Pension Service and the Samsung Group’s Future Strategy Office on Nov. 23. Investigators were attempting to determine whether there was some kind of deal between President Park Geun-hye and Samsung about the pension service’s decision about voting in favor of the merger of Samsung C&T and Cheil Industries in July 2015. With a special prosecutor soon to be appointed, the prosecutors are focusing their efforts on an investigation aimed at determining whether there was quid pro quo between Park and Samsung.

“We raided four places, including the headquarters of the National Pension Service, the pension fund’s operation division, and the Samsung Group’s Future Strategy Office. The raid was aimed at acquiring evidence [related to bribery by Samsung],” said a source at the prosecutors’ office of special investigations on Nov. 23.

Samsung gave 20.4 billion won to the Mir and K-Sports Foundations, or one-fourth of the total money (77.4 billion won) donated to the two foundations. Samsung also gave more than 5 billion won to Choi Sun-sil and family members such as her niece Jang Si-ho. The prosecutors suspect that this money changed hands to secure cooperation from the Blue House or Park on the merger between Samsung C&T and Cheil Industries, which was the most critical issue for Samsung last year.

When the prosecutors brought charges against Choi and others on Nov. 20, they announced that they would “make a decision [about the Samsung Group] after further investigation.”

The merger between Samsung C&T and Cheil Industries that occurred on July 17, 2015, was the final step in passing control of the Samsung Group to the third generation, represented by Samsung Electronics Vice Chairman Lee Jae-yong, which was the group‘s most important task last year. At the time, there were accusations that the merger ratio of 1 to 0.35 between Cheil Industries and Samsung C&T favored the family that owns Samsung, and Elliott Management, an American hedge fund, led the opposition to the merger. The merger motion barely passed by a margin of 2.8 percentage points, and the deciding factor was the support of the South Korean pension fund, a major stockholder that by itself held an 11.2% share in the company.

While the pension fund claimed that it had followed protocol in making its decision, there were quite a few suspicious aspects of the decision. The fund did not have an internal expert committee review the merger motion, and it ignored the recommendation of external advisory bodies to vote against the merger. There was also a whistle-blower at the pension fund who claimed that he had been directly and indirectly pressured to vote in favor of the merger by the Blue House and by Moon Hyung-pyo, who was the Minister of Health and Welfare at the time.

Park had a private meeting with Lee Jae-yong on July 25, immediately after the merger motion passed, and Samsung shortly donated 20.4 billion won to the two foundations. That September, Samsung paid an addition 3.5 billion won to Choi and provided 1.5 billion won in funding to the Korea Winter Sports Elite Center, which was established in June 2015.

The prosecutors had already raided Samsung two times earlier this month. The fact that they have launched a third raid on the group - along with the National Pension Service - while talking about “illicit favors” suggests that they have already made significant progress in their investigation.

“The prosecutors seem to be confident that they can bring bribery charges against President Park. Samsung could be the other party in those charges,” said an attorney who formerly served as a prosecutor. The fact that the prosecutors asked Park for the third time to schedule questioning can be understood in the same context.

If favors were exchanged between Park and Samsung, they could be charged with third-party bribery. It is estimated that the pension service suffered hundreds of billions of won in losses because of the merger while Lee enjoyed trillions of won in profit, strengthening his control over the group.

During their raid of the Samsung Group on Nov. 23, the prosecutors targeted the office of Choi Ji-sung, head of the group’s Future Strategy Office and one of Lee Jae-yong‘s closest associates. Investigators are also looking for evidence that Samsung executives were involved in the scandal. The previous day, the prosecutors received a deposition from Choi Kwang, former chairman of the board of the National Pension Service, and they are soon planning to call in Moon and Hong Wan-seon, former director of the pension service’s fund operating division, for questioning.

The prosecutors are focusing their investigation on issues that are likely to lead to bribery charges, such as the Lotte Group’s additional payment of 7 billion won to the K-Sports Foundation. “We’re not sure when the special prosecutor will be appointed, but we‘re planning to continue our investigation [into charge of bribery]. It may not be possible to change the charges we have already filed, but we’ll gather the evidence that can be gathered and hand it over to the special prosecutor if necessary,” said a source with the prosecutors.

By Choi Hyun-june, staff reporter

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