South Korean corporate chiefs told a parliamentary panel on Tuesday that they were not seeking favors when they made contributions to two foundations at the heart of a scandal that appears poised to bring down President Park Geun-hye.
Still, the head of the GS Group, one of the nine conglomerate bosses summoned to appear at the unprecedented televised hearing, acknowledged that it was hard to say no to the government.
“It’s a South Korean reality that if there is a government request, it is difficult for companies to decline,” said Huh Chang-soo, who heads the energy-to-retail GS Group and is also chairman of the Federation of Korean Industries, the main lobby group for the conglomerates known as chaebol.
The bosses of conglomerates controlling revenue equivalent to more than half the country’s economy were questioned over whether they were pressured by Park or a friend and aide to give money to non-profit foundations, which backed initiatives put forth by Park, in exchange for special treatment.
Park faces an impeachment vote on Friday over the scandal, although even if the vote succeeds it must be ratified by the Constitutional Court, which could take months.
Samsung Group leader Jay Y. Lee, who sat at the center of the witness table, said Park had asked him during one-on-one meetings for support for boosting cultural and sports-related developments but did not specifically request money.
“There are often requests from various parts of society including for culture and sports. We have never contributed seeking quid pro quo. This case was the same,” Lee said, adding that he was embarrassed by the situation and was appearing with a “heavy heart.”
Samsung donated 20.4 billion won (US$17.46 million) to the two foundations, the most of any group, and prosecutors raided its offices last month.
Lee denied allegations from lawmakers that Samsung lobbied to get the National Pension Service to vote in favor of a controversial 2015 merger between two Samsung Group affiliates but said the conglomerate will move to clean up its act.
As there are negative perceptions about it, I will abolish it
“I will take all responsibility related to the current situation, legal or ethical, if there is any,” said the 48-year-old Lee, the third-generation leader of the country’s biggest conglomerate, who received the lion’s share of the panel’s often-hectoring questioning.
Lee denied knowledge of the group’s contribution to the foundations at the time it was made and said he recognizes the conglomerate’s key future strategy office was at the center of criticism.
“I am cautious about this since it’s something that was created by the founder chairman and then the current chairman (Lee Kun-hee) but as there are negative perceptions about it, I will abolish it,” he said.
The office is a key organ within the Samsung Group, responsible for major decisions such as acquisitions or entering new businesses.
The family-controlled chaebol have long dominated Asia’s fourth-largest economy, working closely with the government in a system that helped the country rebuild from the ravages of the 1950-53 Korean war, but that, critics say, is due for reform, including improved corporate governance and transparency.
Running the gauntlet
The corporate titans ran a gauntlet of media and protesters as they entered the National Assembly building that sits along the southern bank of the Han River.
None of the chaebol, which are among 53 corporate groups that gave money to the foundations, has been accused of any wrongdoing in the case, but a protester outside the parliamentary building could be seen holding a sign saying: “Arrest the chaebol chiefs.”
It is the first time such a large group of major Korean corporate chieftains has appeared for a parliamentary hearing.
Each witness was allowed to bring one lawyer and one company official to the hearing, and, if needed, an aide for medical support, according to a lawmaker’s office.