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Sat, Nov 24, 2007 - Page 10 News List

Samsung may face independent probe

RESISTANCE The South Korean president has hinted at a veto of a parliamentary bill calling for the setting up of an independent counsel to investigate bribery allegations


South Korea's parliament voted yesterday to set up an independent inquiry into claims that the nation's biggest business group Samsung operated a huge bribery operation.

Legislators from all parties voted 155-17 for a bill to appoint an independent counsel despite objections from the government, which said such an inquiry would tarnish Samsung and the country.

State prosecutors have already launched a separate investigation into claims by a former employee that Samsung had created a slush fund to bribe hundreds of prosecutors, officials and journalists.

The South Korean giant denies the allegations.

"An independent counsel is feared to seriously hurt the reputation of [Samsung] and our country," Justice Minister Chung Soung-jin told parliament's judicial committee earlier in the day, urging politicians to wait for the outcome of the prosecutors' probe.

Samsung wields enormous influence in South Korea, to the extent that some critics refer to it as the "Republic of Samsung."

Group-wide assets are valued at US$280.8 billion and its exports were worth US$66.3 billion last year, more than 20 percent of the nation's total.

South Korean President Roh Moo-hyun has hinted at a veto of the bill, saying an independent counsel could conflict with the prosecution probe.

Apart from the slush fund claims, the bill calls for a probe into illegal funds provided during and after the last presidential election.

Some campaign managers for Roh and for his then-opponent Lee Hoi-chang, now an independent presidential candidate, were jailed in 2004 for taking illegal campaign funds from Samsung.

Samsung said the probe could damage its business at a tough time.

"It is very regrettable that Samsung faces a probe by an independent counsel at a time when its business environment is not good," a group statement said. "We are very concerned that it may aggravate our difficulties next year."

The bill authorizes an independent counsel, to be recommended by an association of lawyers, to lead a team comprising three assistants and 30 investigators for a two-month inquiry.

It would also authorize investigations into suspicions that group boss Lee Kun-hee illegally traded shares of its subsidiaries to transfer ownership to his son.

In 2005 two Samsung executives were given suspended jail terms after being convicted of illegally handling the father-to-son transfer of ownership.

The slush fund claims were made by Kim Yong-chul, who headed the group's in-house legal team for seven years until 2004.

Kim said he himself had bribed prosecutors on behalf of Samsung and accused it of hiding slush funds in the bank accounts of executives. He has produced no evidence in public, and Samsung has described the claims as groundless.

Two executives are suing the former lawyer for defamation.

However, Samsung was hit again last week after a former legal aide to Roh said one of its officials offered him a cash bribe hidden inside a book in 2004. He said he rejected it.

Samsung and other giant groups known as chaebol spearheaded the nation's dramatic rise from postwar poverty to prosperity. But their reckless expansion was partly blamed for triggering the financial crisis of 1997.

Top conglomerates have often been accused of cozy ties to politicians and of a lack of transparency.

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