Kim Young-chul held a press conference today where he made new allegations and disclosed documents to back up his claim. First he detailed how Samsung affiliates created a 200 billion Won(about USD 200 million) slush fund.
According to Kim, Samsung Corporation, one of the group affiliates, made contracts with another subsidiary Samsung SDI’s offices in London, Taiwan and New York, to create the slush fund. For example, the London unit bought memory chips at 100 won overseas and resold them to Samsung SDI at 120 won, having one won as commission and diverting the remaining 19 won into the slush fund.
He showed a memorandum with signatures of a Samsung Corporation executive and the company’s London office head.
And how was this money spent? Part of it was spent on art.
Kim said parts of the fund were spent in purchasing artwork in 2002 and 2003 by the chairman’s wife Hong Ra-hee, who is director of Leeum Samsung Museum of Art, and other Samsung-related figures including Shinsegae Group Chairwoman Lee Myung-hee.
The price of the artwork totaled 60 billion won, and Kim disclosed a list of pieces, including Happy Tears by Roy Lichtenstein.
Kim also alleged that five Samsung companies cooked the books to the tune of 7 trillion Won(about 7 billion USD) and that Samil PriceWaterhouseCoopers helped in the effort.
Kim also said several Samsung affiliates conducted accounting fraud in 2000, but Samil PricewaterhouseCoopers, an accounting firm, connived with this in return for entertainment.
Of course Samsung, and Samil PWC are denying the allegations.
It also looks like the Man himself won’t be going to the States for “medical treatment”. According to some news reports, the prosecution has taken steps to prevent 8 ~ 9 high level Samsung executives from leaving the country, including Chairman Lee.
On a side note, Pres. Roh has denied allegations that he received bribes from Samsung after his election on 2002.
11 Comments
It has been my understanding that the sort of subterfuge described in the first part is one that has long been used by Chaebol to get around the government’s limitations of how much money can be diverted overseas, thus special funds were created and kept until needed. The real question for me is what was the funding used for.
Buying art is hardly a decadent thing to do, IMHO.
I love this guy, even more now that he’s putting some heat to Samil too. Hopefully, it’ll be fun watching them dance for a bit along with their client.
And Roh denies the allegations? Of course he must be telling the truth - his statement sparkles, like a diamond of rare size and beauty.
“Buying art is hardly a decadent thing to do, IMHO.”
Either R Elgin does not own shares in any of the Samsung Group companies allegedly involved in this scam or he does not fully understand the nature of the allegation.
However, I agree: Buying art is hardly a decadent thing to do.
Is a share-holder purchased Picasso in your kitchen decadent?
(That’s a true story. Two of my buddies were friends with the daughter, Lee Yoon-hyung, and they were at the Lee residence often. That museum in Hannam-dong was really built for her, and she was in the US to study to be its curator.)
The guy is a despicable one. While he had been working for Samsung on fat salary to the tune of $10 million over seven years in the company and committing all those alleged offences himself, and then after leaving the company, as a lawyer in a law firm working for Samsung.(It’s not clear how much he received for working in the law firm.) It’s only after he left the law firm and realised there were no more fat checks coming to him that he decided to revenge against the company that gave him a comfortable life for many years.
While it’s not admirable for a major company such as Samsung to commit such alleged wrongdoings, it would be naïve to think that it’s just Samsung that would have been doing such activities in Korea, as it is practically impossible to do businesses without greasing the palms of bureaucrats and others in the position of power in Korea
But the news such as this can contribute to the innocent eyes of foreigners who do not have the understanding of the inner workings of Korean society with a particularly biased view toward Samsung, when in fact just about every other business-big or small- in Korea is doing pretty much the same thing.
Re: #5
“The guy is a despicable one”
Ye olde blame the whistle-blower, eh ? You’ll find very few squeaky-clean whistle-blowers. However, he is doing the Korean economy a big favor by providing much-needed details and evidence against Samsung and Samil PWC.
“…who do not have the understanding of the inner workings of Korean society…”
So, in other words, let’s do nothing to improve the corruption in Korea, Inc. and let Korea continue to slip in the world GDP rankings. You must really hate Korea, then. *sarcasm*
I take it by defending Samsung and insulting the whistle-blower that you’re a strong supporter or Korea and thus its economy, yes ? If so, I encourage you to think about how corruption acts as a frictional tax, thus putting the Korean economy at a disadvantage versus other world economies that have less frictional drag.
As an example, look at foreign direct investment. While the Chinese economy has benefited enormously from FDI, Korea, Inc. continues to drive away foreign capital with anti-competitive behavior, including in your words, “greasing the palms of bureaucrats and others in the position of power in Korea”.
Also, look at all of the other very innovative and hard-working companies in Korea who can’t dare to compete with a corrupt, monopolistic company like Samsung.
@6
“Also, look at all of the other very innovative and hard-working companies in Korea who can’t dare to compete with a corrupt, monopolistic company like Sa..”
“Monopolistic?” …other very innovative and hard-working companies in Korea… how about LG and Hyundai, who have very successful mobile phone and semiconductor businesses, respectively… and both companies are daring to compete and hanging in quite quite well on the world stage with the “monopolistic” SS, whose biggest products are mobile phones and semiconductors.
Thanks for making it clear that such corruption is rampant throughout Korean society. Now we know that it’s not just Samsung of which we should be careful, but doing business with Korea tout suite that we should avoid.
If ‘foreigners’ have ‘innocent eyes’, than what better thing than to expose violation of generally accepted accounting principles for all to see? This non-Korean (a local with a non-foreign IP, by the way) prefers that Korean accounting firms adhere to Korean law, so yeah, I’m naive all over the place, just like every other investor (regardless of their nationality or ethnicity) here or elsewhere.
The dude didn’t get the memo that exposing this kind of corporate malfeasance to the world is much, much worse than the actual malfeasance.
I would like to see the full list of art they acquired. Does anyone know if it has been published?