(6th LD) Parliament questions biz tycoons on scandal
South Korea's eight major business tycoons appeared at the National Assembly on Tuesday in line with the probe into a corruption and influence-peddling scandal involving President Park Geun-hye and her confidante.
The investigation centers on conglomerates' alleged behind-the-scenes deals with the confidante, Choi Soon-sil, and whether the president pressured them to donate to two nonprofit foundations: Mir and K-Sports. There have been suspicions that the money was then unlawfully funneled to Choi.
Attending the session are the chiefs of Samsung, Hyundai Motor, SK, LG, Lotte, Hanwha, Hanjin and CJ.
Each conglomerate is being grilled over their connection with the scandal, with lawmakers condemning the lack of morality in local family-controlled groups.
The tycoons expressed regret over their ties to the two foundations, but none admitted to providing the funds so they could secure favors.
The session especially focused on Samsung heir apparent Lee Jae-yong, as investigations showed that the company received support from the National Pension Service (NPS) for its controversial merger of two affiliates in 2015 in exchange for donations and favors to Choi and her daughter.
In 2015, the Samsung Group merged two of its affiliates despite opposition from overseas investors. The state pension fund operator, which held an 11.21 percent stake in then-Samsung C&T Corp. and a 4.84 percent stake in Cheil Industries Inc., supported Samsung, although some minor shareholders opposed the move.
The merger was seen as a step toward paving the way for the heir apparent to take control of the conglomerate amid his father's hospitalization. His father Lee Kun-hee has been in the hospital since May 2014 after suffering a heart attack.
During the parliamentary session, Lee Jae-yong said the merger was not related to his succession and claimed it was only intended to benefit the companies, also ruling out connections to the scandal.
"The NPS is the biggest investor in Samsung affiliates," Lee said. He was questioned over meeting officials from the NPS about the deal even though he didn't have any shares in the former Samsung C&T.
Lee said the meeting with the NPS official followed the request made by the institutional investor to exchange opinions on the future of Samsung. The topics included new business areas and other shareholder-related policies.
Lee, however, admitted that Samsung provided Choi's daughter Chung Yoo-ra, a professional equestrian, with a horse valued at 1 billion won.
The Samsung heir apparent said he will do his best to avoid being involved in such scandals in the future. Lee said he only recently learned of Choi.
"I am embarrassed to be involved in the incident," Lee said. "We should have been a better example as a South Korean company." He also said that while he met President Park twice, neither time involved her asking Samsung to contribute money to Mir or K-Sports.
Lee said that the chief executive did ask Samsung to do its part to promote South Korean culture and sports.
"If there is anything I should take responsibility for, I will do so," Lee also said.
Meanwhile, the presidential office Cheong Wa Dae dismissed the allegations that a presidential secretary directed Hong Wan-sun, a former head of the NPS' asset management division, to support the merger scheme.
"It is not true at all," Cheong Wa Dae said in a press release.
Lotte Group head Shin Dong-bin also said he was not directly involved in the scandal.
Shin said the decision to provide an additional 7 billion won was made by Lee In-won, the group's vice chairman and close aide of the incumbent chief, who was found dead in an apparent suicide late August while waiting for a summons by prosecutors on the group's alleged corruption.
Shin added the donation is not linked to the group's effort to win business rights to operate duty-free shops in Seoul.
The hearing is expected to affect the opposition-led impeachment vote against Park slated for Friday, political pundits said.
Park faces her biggest political crisis amid allegations that Choi exerted influence on state affairs without any seat in the administration based on her friendship with the president.
Chey Tae-won, head of SK Group, said it refused to provide donations of 8 billion won to the K-Sports Foundation, as the project was believed to be fragile. Sources said SK Group suggested another amount, but the deal was later scrapped.
Hyundai Motor Group Chairman Chung Mong-koo said he does not remember if the company provided projects worth 6.2 billion won to an advertisement company virtually controlled by Choi.
"I was not directly involved in advertisement issues. I do not remember," Chung said.
Chung, 77, went to the hospital during the session at 6:50 p.m., citing health issues. Hyundai Motor Group said Chung had previously undergone heart surgery, requesting parliament to give him permission to meet doctors.
He was replaced by another official from Hyundai Motor Group at 8:30 p.m.
Other older tycoons, including LG Group head Koo Bon-moo, were also allowed to return home early.
Hanjin Group Chairman Cho Yang-ho admitted receiving a request from the presidential office to provide favors in the personal affairs of an employee who was a relative of a close aide of Choi.
Other conglomerate heads, meanwhile, said it is hard for local conglomerates to refuse requests made by the presidential office.
"Local companies face challenges in turning down requests made by Cheong Wa Dae, which asked for donations to the Mir and K-Sports foundations," said Huh Chang-soo, head of GS Group, who attended the session as an official of the Federation of Korean Industries (KFI).
"Companies have no other choice but to follow governmental policies," LG Group head Koo Bon-moo added, though making clear that the investments made by the conglomerate did not take into account getting something back in return.
Along with the questioning over their link to Choi, lawmakers also claimed the scandal is attributable to excessive ties between the government and chaebol, or family-controlled conglomerates, adding the tycoons must make efforts to end such connections.
After a question from a lawmaker, the Samsung heir apparent said he will have the group leave the FKI, the nation's largest business lobbying group.
The parliament, meanwhile, is set to hold the second questioning session on Wednesday to grill others linked to the scandal.
The questioning will focus on whether the Choi family received unlawful benefits by using its connections with Park. Choi's acquaintances will also be grilled over allegedly receiving illegitimate profits in the cultural and sports realms.
Choi, along with other key figures, however, said earlier this week they will not attend the hearing, citing health reasons.
Choi, 60, who was arrested in early November, notified parliament of her decision, citing her fragile health and ongoing trial. Choi's sister Choi Soon-deuk and niece Chang Si-ho also said Monday they will not appear before the parliamentary probe, citing health issues.
The whereabouts of Choi's daughter Chung Yoo-ra, and Woo Byung-woo, ex-senior presidential secretary for civil affairs, also remain unknown, indicating they may not show up for the parliamentary session.
Kim Ki-choon, former presidential chief of staff, and Cha Eun-taek, a former commercial director who is alleged to have used the connection with Park's confidante to pocket profits, have not yet expressed their plan to show up.
Pundits said the parliamentary investigation may end without meaningful headway if lawmakers fail to question Choi and her close acquaintances. The National Assembly said it may issue an order to compel Choi to testify, as a witness.
Source: Yonhap News Agency