hankyoreh

Samsung’s practice of secretly lobbying politicians is returning to the spotlight amid allegations that the company paid American legal fees for DAS, an automotive parts supplier that is thought to be controlled by former South Korean President Lee Myung-bak. Not only is this a case of bribery similar to the equestrian assistance given to former president Park Geun-hye’s confidante Choi Soon-sil, but it is also structurally identical insofar as it is “targeted lobbying” backed by remarkably accurate information.

The prosecutors regard their investigation into allegations about legal payments made on behalf of DAS – which they launched by carrying out a series of raids on Feb. 8 and 9 – as a bribery case, Hankyoreh reporters learned on Feb. 11. In early 2009, DAS filed a lawsuit in the US in order to recover 14 billion won (US$12.8 million) in money invested in BBK. The prosecutors believe this was a case of quid pro quo: they think that Samsung paid millions of dollars in legal fees to Akin Gump, a major US law firm, in return for Lee, the former president, giving Samsung Electronics Chairman Lee Kun-hee a special pardon at the end of that year.

At the time, the prosecutors and the special prosecutor had both concluded that DAS was not owned by Lee but was jointly owned by his older brother Lee Sang-eun and by his brother-in-law Kim Jae-jeong, but Samsung had a keener grasp of the situation. Despite considerable signs of law-breaking (including embezzlement and concealment of assets overseas), Samsung sent funds from its US subsidiary account and even recruited Lee Hak-su, an alumnus of Korea University like Lee Myung-bak, who was no longer active in management at the Samsung Group but remained an advisor there.

The prosecutors consider this circumstantial evidence that Samsung had already determined that Lee was pulling the strings at DAS. Samsung gave Lee exactly what we was looking for, and Lee returned the favor by issuing a pardon specifically for Lee, the prosecutors contend.

This is very similar to Samsung’s equestrian support of Choi Sun-sil in Germany that was discovered in investigations by a team led by special prosecutor Park Young-soo. Back in 2015, when other companies were trimming the amounts requested by Choi’s associates without even being aware of her existence, Samsung bought a horse worth millions of dollars for Choi’s daughter Chung Yoo-ra using its German susbsidiary account.

The fact that Samsung Electronics Vice Chairman Lee Jae-yong needed South Korea’s National Pension Fund to vote in favor of the merger of Samsung C&T and Cheil Industries to facilitate his inheritance of management rights over the group is thought to exhibit a similar quid pro quo relationship to the pardon granted to Lee Kun-hee in exchange for Samsung paying DAS’s legal fees.

The consistent pattern of Samsung’s lobbying is also likely to be highlighted as evidence contradicting the arguments advanced by Samsung in Lee Jae-yong’s appeal and elsewhere that Lee is “just a misunderstood victim.”

“If the courts agree that Samsung lobbyists have been on the money every time [in knowing what to offer the targets of their influence], the defendant’s arguments are less likely to work,” said a former prosecutor who is now working as a lawyer.

It remains possible that Lee Jae-yong will once again be investigated by the prosecutors in connection with the decision to pay DAS’s legal fees. When the payment was made, Lee Kun-hee was not playing an active role in management of the group. “We’re open to every possibility as we look into who made the final decision [about paying the legal fees],” said a source with the prosecutors.

“There’s not really anything we can say under the present circumstances,” a spokesperson for Samsung said when asked for comment.

By Kim Yang-jin, staff reporter

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