Why it matters to you
A South Korean political scandal has seen Samsung executives face accusations of corruption, and even arrest warrants
Samsung Group is embroiled in a political scandal that has dominated headlines in South Korea recently. It’s one of several major conglomerates accused of making donations to non-profit foundations in exchange for political favors, which in Samsung’s case may have smoothed the path for a controversial merger that was approved in July 2015.
After prosecutors raided Samsung’s corporate offices in Seoul, South Korea, at the end of November 2016, company executives have repeatedly appeared before a parliamentary committee, while links to bribery and corruption are being investigated by a special prosecutorial team. Eventually, Samsung head Lee Jae-yong was questioned, leading to an arrest warrant that named him being issued. While the arrest warrant was rejected by a court on January 19, it may be reissued at a later stage of the prosecution.
Here’s everything you need to know about the ongoing case.
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What’s the background?
The accusations against Samsung and other South Korean companies, including Hyundai, SK Group, and Lotte Group, are related to the ongoing investigation into South Korea’s president Park Geun-hye, and her involvement in extorting money from major corporations.
President Park has been accused of assisting in an extortion scheme with unofficial presidential aide Choi Soon-sil. More than 50 businesses were allegedly pressured to make donations potentially worth $69 million to sporting foundations backed by Choi, which were set up following the Samsung merger, then used for personal financial gain and in exchange guaranteeing deals.
The November 2016 raid of Samsung’s headquarters took place alongside another at the national pension fund, which according to a local report from the Yonhap News Agency, may have been pressured into supporting the controversial Samsung merger in 2015. The fund’s approval is regarded as vital to the merger’s success, and a surprising move at the time, due to allegations it benefited the Samsung Group’s controlling family more than the shareholders.
The head of South Korea’s National Pension Scheme, Moon Hyung-pyo, who was arrested in December 2016, has been indicted on charges of abuse of power and perjury. It wasn’t the first time Samsung had been raided in relation to the investigation into Park and Choi either. Another took place earlier in November.
Samsung says in its official statement, “It’s difficult to agree with the special prosecutor’s decision, because Samsung did not make contributions in order to receive favors,” and the company denies the allegations against itself and Lee Jae-yong. The recall and arrest warrant came just a month after South Korea voted to impeach president Park Geun-hye, who has called the accusations against her “groundless.” Choi Soon-sil also denies any wrongdoing.