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There's more bad news for Samsung

by on23 November 2016

You can never find a park when you need one

If it was not enough that one of its flagship phones developed a reputation for melting, Samsung has now been sucked into a government influence-peddling scandal.

South Korean prosecutors raided the offices of Samsung after media reports of alleged links with a confidante of President Park Geun-hye who has been indicted in an influence-peddling scandal.

At the heart of the issue was South Korea's largest pension fund, the National Pension Service (NPS). Coppers are rather interested in NPS’s decision to approve a $8 billion merger of Samsung C&T and Cheil Industries last year.

It looks like prosecutors have widened their investigation into allegations of influence-peddling in the corruption scandal that has rocked Park's presidency and highlighted the murky relationship between the government and big businesses.

NPS backing was crucial to the merger’s success and some South Korean media reports said its approval came under mysterious circumstances.

Park and her confidante, Choi Soon-sil, are under investigation for allegedly improperly pressuring major conglomerates, including Samsung to raise funds for foundations that backed Park's policy of promoting the cultural and sports communities.

Lee Young-ryeol, the senior prosecutor directing the probe, said on Sunday 53 conglomerates, "fearing direct and indirect drawbacks to business activities such as tax audits", were "coerced to contribute funds" to the foundations.

The merger of the Samsung affiliates was approved by shareholders in July 2015 and prosecutors said the two foundations involved were set up in the following six months.

NPS has defended its decision as the press claim that the deal helped the Samsung Group family to cement control of the merged firms at the expense of other shareholders.

"The reason we approved the merger was due to taking a comprehensive view of the merger's synergy effect and potential for stock value increase," it said in a statement last week.

Last modified on 23 November 2016
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