'Companies blackmailed by Choi Soon-sil'
By Lee Hyo-sik
Hyundai Motor, Lotte, POSCO, KT and other large companies were pressured by President Park Geun-hye’s confidant Choi Soon-sil and senior presidential secretary An Chong-bum, the prosecution confirmed Sunday.
While announcing the results of a month-long investigation into the unprecedented corruption and influence-peddling scandal, investigators said Choi and former Senior Presidential Secretary for Policy Coordination An pressed 53 member companies of the Federation of Korean Industries (FKI) to offer a combined 77.4 billion won ($66 million) to the Mir and K-Sports foundations, set up and controlled by the President’s longtime friend.
Businesses had no other choice to but to fund the two dubious foundations because they feared that they would face a tax audit or suffer other possible repercussions if they refused to give money, according to prosecutors.
“We found that Choi and An pressured Lotte Group to provide 7 billion won to the K-Sports Foundation in the name of constructing a sports facility in Hanam, Gyeonggi Province,” said Lee Young-ryeol, chief of the Seoul Central District Prosecutors’ Office, who heads the investigation team.
In May, Lotte Chemical and five other group units gave the money to the foundation, but received it back on June 10, a day before the prosecution raided Lotte headquarters and offices of its major affiliates.
At the time, Lotte Chairman Shin Dong-bin and other founding family members were facing investigations for breach of trust, embezzlement and other illicit behaviors, amid the escalating sibling feud over control of Korea’s fifth-largest conglomerate.
The chief prosecutor said Choi and An, who were both indicted on charges of abusing power, coercion and attempted fraud, conspired to force Hyundai Motor to procure absorbent materials, valued at 1.1 billion won, from a supplier run by Choi’s acquaintance.
Both individuals pressured the nation’s largest carmaker to award advertising contracts worth 6.2 billion won to Playground Communications, a public relations firm run and owned by Choi’s associate Cha Eun-taek.
On Sunday, a senior executive at Hyundai Motor admitted he could not ignore An’s request, stressing the two companies did not benefit much from dealings with the carmaker.
“Choi and An also orchestrated a failed attempt to forcibly take over the shares of POSCO’s former advertising subsidiary Poreka last year,” Lee said. “They were found to have abused their official authority to press the steelmaker to set up a fencing team and have it managed by Choi’s sports management firm, The Blue K.”
In addition, KT was pressured by Choi and An, forcing the nation’s second-largest wireless service provider to hire Choi’s two associates as company executives, as well as award advertising deals worth 6.8 billion won to Playground Communications.
Both POSCO and KT, which were once owned by the government, have been vulnerable to political influence due to their governance structure. Unlike family-controlled conglomerates, their CEOs are selected once every three years with no majority stakeholders, making them prone to pressure from those in power.
“Choi and An also forced Grand Korea Leisure (GKL) to establish a wheelchair fencing team and have it managed by The Blue K,” Lee said.
The state-run Korea Tourism Organization holds a 51 percent stake in GKL, the operator of Seven Luck Casino.