The soap opera in Seoul continues. On Tuesday, in a brief TV address, President Park Geun-hye offered to avoid impeachment by resigning – although not immediately – from office. Opposition legislators, viewing the offer as an attempt to quash the impeachment effort, said no, promising to go ahead with the impeachment vote, which had been planned for today, but which has now been postponed to next Friday. By day before yesterday, however, parliamentarians from Park’s party had switched from supporting impeachment to going along with a deal to let her resign – even though she might not quit until some time in April.
Meanwhile prosecutors continue to uncover details of the corruption scandal that set all this drama in motion. As we’ve seen in the last couple of weeks, the probe centers on fishy payouts by various family-run conglomerates – known in South Korea as chaebols – to foundations under the control of Park’s close friend Choi Sun-sil. Among these suspicious outlays are multiple contributions by the Samsung Group, the biggest chaebol of all, that added up to a cool $20 million.
What did Samsung get in return for its $20 million? That’s under investigation, too. One focus is on last year’s merger between two companies in the Samsung Group – Samsung C&T, which is involved in construction, trade, apparel, and resorts, and Cheil Industries, which sells textiles, apparel, and chemicals.
The merger was a subject of fierce contention. On one side were the top honchos at the Samsung Group, who strongly favored the merger because they considered it necessary to keep the group under strict family control – a chaebol tradition. Lee Jae-yong, Vice Chairman of Samsung Electronics, was especially pro-merger, because he and his family owned 42% of Cheil, and the merger terms were highly favorable to Cheil shareholders.
These insiders were vigorously opposed, however, by various outsider shareholders in Samsung C&T, who believed – with good reason – that the merger wasn’t in their own best interests.
So who cast the deciding votes – the votes that put the merger over the top? South Korea’s National Pension Service, which owned 11% of Samsung C&T. Which raises another question: why did the pension fund vote the way it did?
Now comes an answer. In a major revelation, a member of the pension fund’s decision-making advisory board has told the Hankyoreh – South Korea’s most respected independent newspaper – the story behind its pro-merger vote. The fund, he said, didn’t vote for the merger because its analysts decided that was the preferred choice for South Korean pensioners. On the contrary, a consulting firm that the fund had hired to advise it on the question had come down firmly against the merger.
Why, then, did the fund give the merger a thumbs-up? According to the official who spoke to the Hankyoreh, it did so in response to direct pressure from two quarters. One was the Minister of Health and Welfare, who phoned the official and urged a pro-merger vote. The other was a friend of the official who called him on behalf of the Blue House itself – South Korea’s White House.
“My friend told me,” the pension official recounted, “that the Blue House’s position was that I should vote in favor of the merger. If the merger was rejected, he said, the transfer of power at the Samsung Group would run into trouble, which might damage a company that is so important to the Korean economy. A few days later, I got another phone call to the same effect, again representing the Blue House’s position.”
As Hankyoreh puts it, there are “deepening suspicions that the Blue House’s actions were made to compensate Samsung for the assistance it was giving to Choi.” No kidding. Let’s see how this develops.