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KOREA: Samsung slush fund probe widens

Prosecutors continue wiretapping investigation with interrogations of Samsung executives and Agency for National Security Planning leader

The Korea Times
Tuesday, September 6, 2005
By Kim Tong-hyung

Seoul -- The prosecution is widening its probe into Samsung Group as it summoned Kim In-jua, a high-ranking official at Samsung Group’s corporate restructuring office, Tuesday.

Prosecutors questioned Kim, 46, on accusations that the conglomerate channeled illegal funds to presidential candidates ahead of the 1997 elections.

Kim is the second Samsung official to be quizzed by law enforcement authorities over the conglomerate’s bribery allegations, following group vice chairman Lee Hak-soo, 59, who was brought in for questioning last month. The prosecutors said they are considering summoning Lee for a second time as they expand their probe of the company.

"We will be looking into our list of Samsung officials to continue our investigation into the group’s bribery allegations. However, we are not ready to comment on who and when we plan to bring in," said a prosecution official.

Separately, prosecutors Tuesday summoned Kwon Young-hae, 68, who headed the Agency for National Security Planning, the predecessor of the National Intelligence Service (NIS), from 1994 to 1998.

Kwon was questioned over his role in a secret wiretapping team within the spy agency that illegally snooped on high-profile politicians and businessmen during the Kim Young-sam government, that was in office from 1993 to 1998.

Samsung's bribery allegations first erupted in July when local television station MBC reported the content of the recorded conversation in 1997 between Samsung vice chairman Lee and Korean ambassador to U.S. Hong Seok-hyun, then publisher of the Samsung-affiliated newspaper JoongAng Ilbo.

According to transcripts of the audiotapes, Samsung offered about 10 billion won in illegal funds to Lee Hoi-chang, presidential candidate of the then ruling Grand National Party (GNP) ahead of the 1997 election. Hong offered to resign from his post as ambassador shortly after the scandal erupted.

In 1997, Kim had been the director of the finance team at Samsung’s corporate restructuring office. Prosecutors suspect Kim would have had a role in the provision of illegal funds should the allegations on Samsung turn out to be true.

Kim, along with vice chairman Lee, was also summoned by the prosecution in February last year, and was questioned over allegations that Samsung provided slush funds to presidential candidates during the 2002 elections. Prosecutors concluded that Samsung channeled more than 38 billion won in illegal funds.

The statute of limitations for illegal political funding is three years under Korean law, making it impossible to prosecute Samsung executives on the charges. Should prosecutors decide to push further in their investigation of Samsung, legal experts believe they will focus on suspicions of embezzlement, of which the statue of limitations is 10 years.

In July, the civic group People’s Solidarity for Participatory Democracy (PSPD) filed a request with the prosecution to investigate 20 current and former Samsung executives over their alleged corrupt ties with politicians.

The prosecution’s renewed interest in Samsung could indicate a change in the direction of the investigation into Korea’s largest conglomerate.

After the MBC report, law enforcement officials recovered 274 audiotapes and 13 documents containing the transcripts of illegally intercepted conversations of high-profile businessmen and politicians from the house of an ex-intelligence agent.

MBC had obtained the audiotapes from Korean-American businessman William Park, now under arrest, who had attempted to extort Samsung officials. Park had received the tapes from the ex-intelligence agent.

Prosecutors had been reluctant to use the audiotapes as evidence in their investigation because of privacy laws. However, the PSPD’s lawsuit had made it difficult for law enforcement authorities to completely avoid Samsung in their probe.

They brought in Samsung vice chairman Lee Hak-soo last month to question him on his role in the group's slush fund provisions. Prosecutors are also discussing summoning Hong for questioning. There is a remote possibility that investigators could call in Samsung chairman Lee Kun-hee for questioning.