Chaebol Chiefs Deny Funding President Park's Confidante to Secure Favors

Chaebol Chiefs Deny Funding President Park's Confidante to Secure Favors

SEOUL, Dec. 6 (Yonhap) -- South Korea's eight major business tycoons appeared at the National Assembly on Tuesday in line with the probe into a corruption and influence-peddling scandal involving President Park Geun-hye and her confidante.

The investigation centers on conglomerates' alleged behind-the-scenes deals with the confidante, Choi Soon-sil, and whether the president pressured them to donate to two nonprofit foundations: Mir and K-Sports. There have been suspicions that the money was then unlawfully funneled to Choi.

Attending the session are the chiefs of Samsung, Hyundai Motor, SK, LG, Lotte, Hanwha, Hanjin and CJ.

Each conglomerate is being grilled over their connection with the scandal, with lawmakers condemning the lack of morality in local family-controlled groups.

The tycoons expressed regret over their ties with the two foundations, but none admitted to providing the funds so they could secure favors.

The session especially focused on Samsung heir-apparent Lee Jae-yong, as investigations showed that the company received support from the National Pension Service (NPS) for its controversial merger of two affiliates in 2015 in exchange for donations and favors to Choi and her daughter.

In 2015, the Samsung Group merged two of its affiliates despite opposition from overseas investors. The state pension fund operator, which held an 11.6 percent stake in the then-Samsung C&T Corp. and a 5 percent stake in Cheil Industries Inc., supported Samsung although some minor shareholders opposed the move.

The merger was seen as a step toward paving the way for the heir-apparent to take control of the conglomerate amid his father's hospitalization. His father Lee Kun-hee has been in the hospital since May 2014 after suffering a heart attack.

During the parliamentary session, Lee Jae-yong said the merger was not related to his succession and claimed it was only intended to benefit the companies, also ruling out connections to the scandal.

"The NPS is the biggest investor of Samsung affiliates," Lee said. He was questioned over meeting officials from the NPS about the deal, even without having any shares in the former Samsung C&T.

Lee, however, admitted that Samsung provided Choi's daughter Chung Yoo-ra, a professional equestrian, with a horse valued at 1 billion won.

The Samsung heir-apparent said he will do his best to avoid being involved in such scandals in the future. Lee said he only recently learned of Choi.

"I am embarrassed to be involved in the incident," Lee said. "We should have been a better example as a South Korean company." He also said that while he met President Park twice, none involved her asking Samsung to contribute money to Mir and K-Sports.

Lee said that the chief executive did ask Samsung to do its part to promote South Korean culture and sports.

Meanwhile, the presidential office Cheong Wa Dae dismissed the allegations that a presidential secretary directed Hong Wan-sun, a former head of the NPS' asset management division, to support the merger scheme.

"It is not true at all," Cheong Wa Dae said in a press release.

Lotte Group head Shin Dong-bin also said he was not directly involved in the scandal.

The South Korean retail conglomerate provided 1.7 billion won and 4.5 billion won to the K-Sports and Mir foundations, respectively, last year. In May this year, Lotte also provided an additional 7 billion won to the K-Sports Foundation, which was returned a day before prosecutors raided Lotte's offices in June.

Shin said the decision to provide an additional 7 billion won was made by Lee In-won, the group's vice chairman and close aide of the incumbent chief, who was found dead in an apparent suicide late August while waiting for a summons by prosecutors on the group's alleged corruption.

Shin added the donation is not linked to the group's effort to win business rights to operate duty-free shops in Seoul.

The hearing is expected to affect the opposition-led impeachment vote against Park slated for Friday, political pundits said.

Park faces her biggest political crisis amid allegations that Choi exerted influence on state affairs without any seat in the administration based on her friendship with the president.

Chey Tae-won, head of SK Group, said it refused to provide donations of 8 billion won to the K-Sports Foundation, as the project was believed to be fragile. Sources said SK Group suggested another amount, but the deal was later scrapped.

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Top Conglomerate Leaders to Answer whether Choi Soon-sil Squeezed Money from them

Top Conglomerate Leaders to Answer whether Choi Soon-sil Squeezed Money from them