Samsung Bribery Charges Rock Korea Pol

A probe of possible bribery and wrongdoing at the icon of Korean corporate success is emerging as a red-hot issue in the country's presidential election

by Moon Ihlwan

Is South Korea the Republic of Samsung? That's shaping up as a key question as the nation braces for a presidential election on Dec. 19. With just over a month before the vote to replace unpopular President Roh Moo Hyun, a total of 150 lawmakers from three liberal parties on Nov. 14 jointly tabled a bill in the National Assembly, the country's parliament, requiring an independent prosecutor to probe dramatic allegations of bribery and policy manipulation by the giant Samsung Group.

The allegations in the past two weeks by Samsung's former chief attorney, Kim Yong Chul, call into question a major achievement of reform that Roh has claimed. The outgoing president, who can't run for a second term, was elected five years ago on a platform of ending corruption and abuses by giant industrial conglomerates, called chaebol in Korean. He has taken pride in ushering in what he and his supporters say is an era of less corrupt government and society.

"The allegations, if confirmed, are about building a Samsung republic," laments Kim Sang Jo, the Hansung University economics professor heading Solidarity for Economic Reform, a civic activist group. "A corrupt and totally unbridled Samsung will be right at the heart of the failure of Roh's reform," he says.

A Ubiquitous Presence in Korean Society

Samsung, denying all corruption and bribery allegations, last week issued a 25-page statement with detailed rebuttals and stressed that it was not involved in illegal bookkeeping. The allegations are "nothing but one-sided claims lacking any ground or specific evidence," a Samsung statement said. Kim's "repeated false and groundless disclosures only amplify misunderstanding and wild guesses."

Already it is difficult for Koreans to get away from Samsung, which comprises 58 companies, including Samsung Electronics (SSNGY). From TVs and music players to insurance and brokerage services, citizens in the nation have to live with products and services offered by the group, which commands respect as an icon of Korean corporate success (BusinessWeek.com, 10/4/07).

Yet Samsung has sought much greater and "wrongful" influence, according to attorney Kim, who worked as Samsung's in-house lawyer from 1997 to 2004 and the head of its legal department for the last two years of his tenure. Through news conferences and interviews with local media in the past two weeks, he has accused Samsung of running many multimillion dollar slush funds to maintain a huge bribery network covering policymakers, supervisory agents, the judiciary, and the media to lobby against new systems unfavorable to the group and the founding family. No substantiating evidence has been presented so far.

Weak Candidates Jumping on the Bandwagon

Kim also admitted to personal involvement in "falsifying" evidence to cover up schemes designed to transfer management control of Samsung from Chairman Lee Kun Hee to his son. Samsung denies all the allegations and says Kim's wife had threatened the company before his disclosures. No details on the threats were given. In 2005, a Seoul court found two top Samsung Group executives guilty of conspiring in a 1996 deal to help Lee's children buy a majority stake at a discount in the amusement park operator Everland, which serves as a de facto holding company by playing a crucial connecting role in a complicated web of cross-shareholdings among group affiliates that ensure the Lee family controls the whole chaebol with a small stake.

Now with lawmakers demanding a thorough investigation into the alleged corruption and manipulation of national affairs, the Samsung affair is quickly emerging as a hot election issue. The 150 lawmakers, representing the majority in the 299-seat single-chamber National Assembly, were acting on behalf of three presidential candidates who on Nov.