South Korea corporate chiefs deny seeking political favours

Samsung head among those questioned about donations made to two foundations

South Korean corporate chiefs told a parliamentary panel on Tuesday that they were not seeking favours when they made contributions to two foundations at the heart of a scandal that appears poised to bring down president Park Geun-hye.

Still, the head of the GS Group, one of the nine conglomerate bosses summoned to appear at the unprecedented televised hearing, acknowledged that it was hard to say no to the government.

“It’s a South Korean reality that if there is a government request, it is difficult for companies to decline,” said Huh Chang-soo, who heads the energy-to-retail GS Group and is also chairman of the Federation of Korean Industries, the main lobby group for the conglomerates known as chaebol.

The bosses of conglomerates controlling revenue equivalent to more than half the country's economy were questioned over whether they were pressured by Ms Park or a friend and aide to give money to non-profit foundations, which backed initiatives put forth by Ms Park, in exchange for special treatment.


Ms Park faces an impeachment vote on Friday over the scandal, although even if the vote succeeds it must be ratified by the constitutional court, which could take months.

Samsung Group leader Jay Y Lee, who sat at the centre of the witness table, said Ms Park had asked him during one-on-one meetings for support for boosting cultural and sports-related developments but did not specifically request money.

"There are often requests from various parts of society including for culture and sports. We have never contributed seeking quid pro quo. This case was the same," Mr Lee said, adding that he was embarrassed by the situation and was appearing with a "heavy heart".

Samsung donated 20.4 billion won (€16.2 million) to the two foundations, the most of any group, and prosecutors raided its offices last month.

Mr Lee denied allegations from lawmakers that Samsung lobbied to get the National Pension Service to vote in favor of a controversial 2015 merger between two Samsung Group affiliates but said the conglomerate will move to clean up its act.

“I will take all responsibility related to the current situation, legal or ethical, if there is any,” said the 48-year-old Lee, the third-generation leader of the country’s biggest conglomerate, who received the lion’s share of the panel’s often-hectoring questioning.

Mr Lee denied knowledge of the group’s contribution to the foundations at the time it was made and said he recognises the conglomerate’s key future strategy office was at the centre of criticism.

“I am cautious about this since it’s something that was created by the founder chairman and then the current chairman (Lee Kun-hee) but as there are negative perceptions about it, I will abolish it,” he said.

The office is a key organ within the Samsung Group, responsible for major decisions such as acquisitions or entering new businesses.

The family-controlled chaebol have long dominated Asia’s fourth-largest economy, working closely with the government in a system that helped the country rebuild from the ravages of the 1950-53 Korean war, but that, critics say, is due for reform, including improved corporate governance and transparency.


The corporate titans ran a gauntlet of media and protesters as they entered the National Assembly building that sits along the southern bank of the Han River.

None of the chaebol, which are among 53 corporate groups that gave money to the foundations, has been accused of any wrongdoing in the case, but a protestor outside the parliamentary building could be seen holding a sign saying: “Arrest the chaebol chiefs.”

Friday’s impeachment vote sets the stage for Ms Park to be the first democratically elected South Korean leader to leave office early in disgrace. Huge demonstrations have called for her to quit and her approval rating has plunged to just 4 per cent.

Ms Park said on Tuesday she would accept the result of an impeachment vote against her this week but indicated she would not step down now, a top official of her Saenuri Party said.

The comments indicated Ms Park had not changed her mind in the face of intense pressure for her to resign immediately, with an effort to impeach her gaining support from even within her own party.

Last week she asked parliament to find a way and a time for her to step down, an offer that was rejected by the opposition Democratic Party as a stalling tactic. Media reports said she may make a speech this week offering to step down in April, a recommendation made by her conservative Saenuri Party.

Middle school students who were leaving the parliamentary building as chaebol bosses arrived chanted "Park Geun-hye step down!" and a scuffle between metal workers' union members and men who appeared to be guards broke out when Hyundai Motor Group chairman Chung Mong-koo arrived with his son and presumed successor, vice chairman Chung Eui-sun.

It is the first time such a large group of major Korean corporate chieftains has appeared for a parliamentary hearing.

Each witness was allowed to bring one lawyer and one company official to the hearing, and, if needed, an aide for medical support, according to a lawmaker’s office.