At this point, Samsung Electronics Ltd. is finding itself in as much hot water as Donald Trump.
Multiple outlets are reporting that the tech giant’s vice chair, Lee Jae-yong, known professionally as Jay Y. Lee, is being investigated in a country-wide bribery scandal which has already resulted in the impeachment of South Korean president Park Geun-hye.
According to Bloomberg, the Korea Times, and Korea JoonAng Daily, independent investigators will be speaking to Lee on Thursday regarding allegations that he benefitted from a controversial merger after Samsung generously supported the family of Choi Soon-sil, the presidential friend and advisor at the heart of Park’s impeachment scandal. None of the allegations have been proven in court.
“Special prosecutors are mainly after President Park, but in this case, to charge Park with bribery, they have to prove her connection with Samsung,” said Chung Sun-sup, who runs corporate researcher Chaebul.com, told Bloomberg. “Prosecutors used to overlook the chaebols’ wrongdoings in the past, but this scandal is different because citizens can no longer tolerate the cozy relationship between politics and business.”
According to the JoonAng Daily, Samsung pledged 22 billion won (approximately $24.39 million Canadian) to support the equestrian training of Choi’s daughter Chung Yoo-ra. It also contributed 1.6 billion won (approximately 1.77 million) to a winter sports training program established by Choi’s niece Jang Si-ho, and 20.4 billion won to a pair of Choi-affiliated nonprofit foundations.
Perhaps more damaging, it is suspected that in return for the funds, the South Korean president’s office facilitated last year’s merger of Samsung C&T (Samsung’s parent company, which oversees international sales operations) and Samsung affiliate Cheil Industries by ordering the country’s National Pension Service, which held shares in both companies, to vote for the deal, according to the Korea Times. The publication noted that the merger was designed for Lee to increase his stake in Samsung as a whole, ensuring a smooth transition of power from his father, Samsung chair Lee Kun-hee, who suffered a heart attack in 2014.
As mentioned by JoonAng Daily, the National Pension Service also happened to be the largest shareholder of Samsung C&T – and the deal was criticized as unfair for Samsung C&T.
According to the Korea Times, independent investigators involved in South Korea’s presidential scandal have secured a tablet PC owned by Choi that contains emails related to the Samsung merger and the company’s donations to Choi’s family. They are currently reviewing whether to charge South Korean president Park with bribery; should they do so, Choi and Samsung executives Choi Gee-sung, the company’s vice chair, and Chang Choong-ki, president of its future strategy planning division, could be charged with third-party bribery.
As for Lee himself, for now JoonAng Daily reports that his summoning on Thursday is not linked to the investigation team’s newest evidence – Choi’s tablet PC – but previous evidence linking executives Choi Gee-sung and Chang Choong-ki with Choi the presidential advisor. After Thursday’s meeting, the investigation team expects to make a decision regarding which Samsung executives it will attempt to prosecute, according to the Daily – including, possibly, Lee.
Thus far, Samsung has denied that its sponsorship of Choi’s family represented bribery, and has declined to respond to the allegations themselves which, if true, would merely be the latest fiasco in a tumultuous six months for the company, which spent the latter part of last year in damage control mode after it was famously revealed that its Galaxy Note 7 devices were running on 3,500 mAh batteries that were prone to heating up and exploding.
It’s been estimated that the Note 7 alone could wind up costing the company $1 billion USD.