Prosecutors raid NPS, Samsung in Choi scandal
The lobby of the National Pension Service’s (NPS) branch in southern Seoul, where the prosecution conducted a raid, Wednesday. It is alleged Cheong Wa Dae pressured the NPS to facilitate a merger of Samsung’s subsidiaries last year, in return for Samsung’s provision of money and favors to President Park Geun-hye’s scandal-ridden confidant Choi Soon-sil. / Yonhap
By Kim Bo-eun
Prosecutors raided the National Pension Service (NPS), its affiliated offices and Samsung headquarters, Wednesday, over allegations that the former had been ordered by Cheong Wa Dae to facilitate a merger of Samsung’s subsidiaries last year.
Investigators confiscated computer hard drives, cell phones and related documents from the NPS headquarters in the southwestern city of Jeonju, the NPS’ Investment Operations Division in southern Seoul and Samsung Group’s future strategies department at its headquarters in southern Seoul.
The NPS played a key role in the controversial merger of Samsung C&T and Cheil Industries, in which it held an 11 percent and 5 percent stake, repectively, in July last year. The NPS voted for the plan designed in favor of Cheil, which was widely opposed by individual stakeholders of Samsung C&T. It made the “yes” vote decision without a review by an independent panel, which is a normal procedure.
The merger incurred tremendous losses for NPS while profiting Samsung Group’s owner family, who held a 42 percent stake in Cheil Industries. Civic groups estimate the NPS suffered around 70 billion won in losses in the deal. The merger was seen as a means for the group’s vice chairman Lee Jae-yong to increase his shares in the group for a power transfer from his father, Chairman Lee Kun-hee.
According to a local daily report last week, an NPS voting committee member received a call from Moon Hyung-pyo, the then-minister of health and welfare and current chief of the NPS, to vote for the merger. The member also reportedly said he received a call from an unspecified individual that the merger was backed by Cheong Wa Dae.
The NPS has been denying the allegations.
Suspicions are that in return for the government’s support of the deal, Samsung provided money and favors for President Park Geun-hye’s scandal-ridden confidant Choi Soon-sil. Samsung allegedly provided 3.5 billion won through the Korea Equestrian Federation to Choi for training expenses for her daughter Chung Yoo-ra, a dressage competitor. The group also allegedly provided 1.6 billion won to the Winter Sports Elite Center, founded by Choi’s niece Jang Si-ho.
Samsung also donated 20.4 billion won to the Mir and K-Sports foundations, which were set up and virtually controlled by Choi, the largest amount of funds among the nation’s top 53 conglomerates which collectively raised 77.4 billion won.
President Park, Choi and Samsung could face bribery charges if the allegations are found to be true.
Regarding the allegations, the prosecution questioned former NPS chief Choi Kwang, Tuesday, over allegations that he was pressured to quit because he refused to reappoint the NPS’s former Chief Investment Officer (CIO) Hong Wan-seon. Hong led the vote involving Samsung units, and Choi Kwang, who opposed the vote, refused the reappointment which Cheong Wa Dae allegedly pushed.
The prosecution is expected to summon Moon and Hong for questioning soon.