Tycoons on edge over assembly questioning

Choi Soon-sil scandal feared to take toll on corporate activities

By Lee Hyo-sik

Samsung, Hyundai Motor, SK and other conglomerates are on alert as lawmakers are scheduled to question their leaders today over their alleged connections to President Park Geun-hye’s confidant Choi Soon-sil and her associates.

Business groups are scrambling to have their leaders ready for the planned questioning, according to company officials Monday. They say the Choi scandal has already begun adversely affecting their corporate activities.

Some say that they haven’t been able to conduct year-end personnel reshuffles of their top managers or make other important business decisions. Others complain about growing uncertainties associated with the unprecedented influence-peddling controversy.

The heads of the country’s top eight family-controlled conglomerates are Samsung Electronics Vice Chairman Lee Jae-yong, Hyundai Motor Chairman Chung Mong-koo, SK Group Chairman Chey Tae-won, LG Group Chairman Koo Bon-moo, Lotte Group Chairman Shin Dong-bin, Hanwha Group Chairman Kim Seung-yeon, CJ Group co-Chairman Sohn Kyung-shik and Hanjin Group Chairman Cho Yang-ho. Federation of Korean Industries (FKI) Chairman Huh Chang-soo, who is also GS Group chairman, will attend the Assembly’s inquiry.

They will be grilled over the nature of their donations to two scandal-ridden foundations set up and operated by Choi, as well as other business dealings with her and her family members.

They will also likely be questioned about whether they asked for undue favors from the government in return.

But chaebol owners are expected to deny allegations that they made “deals” with President Park or Cheong Wa Dae officials in exchange for giving money to the Mir and K-Sports fFoundations, stressing that they sought no help from the government in resolving pending issues.

In addition, Samsung and Hyundai Motor are expected to argue they had no other choice but to deal with Choi and her associates, fearing they would face a tax audit or suffer other possible repercussions if they did not.

“We are doing everything we can to have the chairman prepared for questioning,” a Hyundai Motor official said. “We are confident that the Assembly’s inquiry will clear us of any suspicions.”

SK Group has also been preparing, saying that Chairman Chey will faithfully answer lawmakers’ questions.

“We have come up with a list of possible questions and prepared answers accordingly. Our chairman will tell the truth. We hope that the inquiry will put an end to the controversy and help us use all our resources for running our business,” a SK official said.

Lotte Group said Chairman Shin will clear all suspicions surrounding Korea’s fifth-largest conglomerate, adding that it has been having a hard time in recent months.

“We have been unable to conduct the year-end reshuffle of our top managers and prepare the 2017 business plan because of the Choi scandal,” a Lotte official said. “Lotte has so many pending issues to take care of. We really would like to see the situation come to an end so that we can focus solely on running our business.”

An executive at one of Korea’s major business associations, who declined to be named, said the Assembly’s questioning of business leaders does no good to anyone.

“The questioning will be aired live on TV, which will be viewed by millions of people,” the executive said. “No matter whether chaebol heads are guilty or not, the event itself will make them look bad. This will certainly tarnish the images of Korea’s top business groups at home and abroad.”

He said conglomerates have become reluctant to invest or hire workers in recent months due to growing risks associated with the Choi scandal and other political instability.

“The government and the National Assembly should place top priority on enabling companies to conduct corporate activities when the Korean economy is falling into deeper trouble,” the executive said. “But unfortunately, policymakers and lawmakers seem to be doing the opposite. They should stop using companies as a scapegoat and leave them alone.”