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Scandal hearings put South Korea tycoons in hot seat

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South Korean President Park Geun-Hye

South Korean President Park Geun-Hye

South Korea lawmakers on Monday kicked off an unprecedented series of hearings that will grill the country’s business elite over a corruption scandal engulfing impeachment-threatened President Park Geun-Hye.

The powerful heads of family-run conglomerates, or “chaebols,” such as Samsung and Hyundai will be among those testifying before a parliamentary investigation ahead of an impeachment vote to remove the president on Friday.

The hearings opened on the back of a series of weekly mass demonstrations in Seoul that have seen millions of people take to the streets to call for Park’s ouster.

Park is accused of colluding with her secretive confidante, Choi Soon-Sil, to strong-arm giant corporations into “donating” nearly $70 million to two dubious non-profit foundations.

Choi, who has been indicted on charges of coercion and abuse of power, is accused of syphoning some of the donated funds for personal use. She denies all criminal charges.

Choi is set to appear at the televised hearings on Wednesday, marking the first time she will answer questions in public on her role in the scandal.

Tuesday’s testimony will be devoted to interrogating the corporate tycoons, including Samsung group scion Lee Jae-Yong, Hyundai chairman Chung Mong-Koo and seven heads of other conglomerates including LG, Lotte, Hanjin and CJ.

They are among the wealthiest and most powerful people in the country, but the “Choi-gate” scandal has taken the lid off simmering public resentment over their influence and perceived sense of privilege at a time of slowing economic growth

– Tycoon tutorials –
According to company sources cited by the largest-circulation newspaper, Chosun Ilbo, many of them have been going through frantic preparations to avoid any public humiliation, holding mock question and answer sessions with aides and memorising responses to sensitive issues.

Some researched subway and bus fares in case they are asked to prove their common-touch credentials, while others sent managers on recces to the national assembly — timing the walk to the hearing room and working out routes to avoid the press, Chosun said.

Chaebol heads are unused to being questioned or held accountable — even to their shareholders.

“It is part of the deep-rooted, twisted corporate culture in South Korea to treat founding family members as if they are royalty,” said Shim Jung-Taik, an author of several books on Samsung and its corporate culture including a biography of its ailing chairman, Lee Kun-Hee.

“None of them would have attended these hearings in normal times. But the public fury shown at recent mass rallies was too much to ignore even for these royals,” Shim said.

– Samsung woes –
Samsung — the South’s largest business group — made the biggest contributions of 20 billion won ($17 million) to Choi’s foundations, followed by Hyundai, SK, LG and Lotte.

Prosecutors have raided the headquarters of Samsung and other groups for any evidence that they received policy favours in exchange for their contributions.

Samsung is separately accused of funnelling millions of euros to Choi to bankroll her daughter’s equestrian training in Germany.

As part of the widening probe, prosecutors are also investigating whether Samsung lobbied officials at the state pension fund for their support over a contested merger deal last year.

Park will not appear before the hearings, after fierce opposition from her ruling conservative party to the idea of her being called.

In order to secure the required two-thirds majority, the opposition-sponsored impeachment motion will need the support of more than two-dozen lawmakers from Park’s ruling Saenuri Party.

Just a week ago, the backing of enough Saenuri rebels seemed assured, but a rather confused resignation offer by Park on Tuesday strengthened the hand of her loyalists who insist she be allowed to step down voluntarily.

The party has since proposed she resign in April — a timeline it justifies as more conducive to a calm and steady preparation for an early presidential election.

The scandal has capped a bad year for Asia’s fourth-largest economy which has struggled with the fallout from Samsung’s Galaxy Note 7 recall crisis, the collapse of Hanjin Shipping and record high household debt.

The Organisation of Economic Cooperation and Development recently slashed the South’s growth outlook for 2017 by 0.4 points to 2.6 percent, after similar moves by Seoul’s central bank.



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