Former South Korean minister of health Moon Hyung-pyo yesterday was convicted of pressuring the nation’s pension fund to support a controversial Samsung merger, in one of the first rulings on key players in the corruption scandals that ensnared the nation’s ousted president and Samsung’s heir.
The merger of Samsung C&T and Cheil Industries in 2015 was crucial in Samsung’s father-to-son leadership succession, but US hedge fund Elliott Associates and other minority shareholders opposed the plan, arguing that it would unfairly benefit Samsung founding family members.
Support from the National Pension Service, a key investor in Samsung, was crucial to ensure shareholder approval. Thanks to the pension service’s vote, Samsung narrowly won the approval, helping Samsung vice chairman Jay Y. Lee consolidate his control over South Korea’s largest business conglomerate.
The Seoul Central District Court sentenced Moon, who in his former capacity oversaw the National Pension Service, to two years in prison.
Moon was found guilty of abusing power to sway the pension fund’s vote on the merger and was also guilty of perjury during a parliamentary hearing, lying about his role in the merger, the court said.
Moon violated the pension fund’s independence, the court said.
A former executive at the pension fund was also found guilty of causing damage to the fund by swaying its investment committee to support the Samsung merger.
Hong Wan-sun, a former head of the fund’s operation division, was sentenced to two years in prison.
The court said Hong swayed the vote, even though he knew that the merger ratio was unfair to Samsung C&T shareholders and hence would cause damage to the pension fund’s stake in the construction company.
The Samsung merger in 2015 and allegations that the pension service was pressured to support its succession plan were among the triggers of the massive corruption scandal that led to the impeachment of Park Geun-hye in March and the arrest of Lee, Samsung’s de facto leader.
Prosecutors have accused Lee, who is on trials for bribing Park Geun-hye and her long-time friend, of offering bribes in exchange for the government’s support of a smooth leadership transition at Samsung, including the merger.
Allegations that the pension fund, which manages about US$508 billion toward South Koreans’ retirement, supported the controversial Samsung merger despite financial damage were among the reasons that prompted South Koreans to stage massive protests last fall.
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