Samsung Chairman Denies Bribery Charges

Samsung Group Chairman Lee Kun-hee arrives for questioning by special prosecutors probing alleged corruption at the special prosecutor's office in Seoul, South Korea, Friday, April 4, 2008.
AP Photo/Ahn Young-joon
Samsung Group Chairman Lee Kun-hee denied Friday that he ordered the creation of a slush fund at the center of a high-profile probe into alleged bribery by South Korea's largest business conglomerate.

"I didn't," Lee, shaking his head, said upon arrival for questioning by special prosecutors. He was responding to a reporter who asked if he had ordered the creation of the alleged illicit fund. He also denied ordering the alleged bribery.

The investigation by an independent counsel is focused on allegations raised by a former Samsung lawyer that the group ran the fund to bribe influential figures, such as prosecutors and judges, as well as other claims.

The 66-year-old tycoon, South Korea's leading captain of industry and one of the country's richest people, was answering a summons announced Thursday by the independent counsel, established by parliament and approved by former President Roh Moo-hyun late last year.

Lee's arrival was broadcast live on national television, illustrating the intense interest in the case in South Korea, where Samsung is a corporate icon.

Prosecutors, who began work in January, questioned Lee's wife for more than six hours Wednesday. His son, brother-in-law and senior Samsung officials, including Vice Chairman Lee Hak-soo, have also endured hours of questioning.

Local media have speculated intensely since the investigation began whether Lee himself would eventually be called in by the special prosecutors, which have about three weeks left to conclude their probe.

Kim Yong-chul, a former top lawyer for the conglomerate, claimed in November that Samsung had 200 billion won (US$200 million) in the slush fund and that Lee's wife used some of the money to purchase expensive works of art from abroad.

Samsung vociferously denied the allegations when they were raised.

The questioning was the first for Lee since appearing before state prosecutors in 1995 over alleged presidential bribes in which he and seven other conglomerate chiefs were later convicted. Lee received a suspended prison sentence.

Lee was not questioned during an investigation into a separate political funds scandal in 2005 as he was out of the country receiving medical treatment in the United States.

State prosecutors eventually cleared Lee and others in that case, citing a lack of evidence and the lapse of a statute of limitations. He later returned to South Korea.

"The result will likely determine the final legal direction of the case including whether Chairman Lee will be indicted," the Hankook Ilbo newspaper said in an editorial Friday, referring to Friday's questioning.

South Korea's family-run industrial conglomerates, known as "chaebol," have long been accused of influence-peddling as well as dubious transactions between subsidiaries to help controlling families evade taxes and transfer wealth to heirs.

Samsung consists of dozens of diverse corporations, some unlisted, and has a complex ownership structure involving cross-shareholdings by group companies.

The conglomerate has interests ranging from shipbuilding to leisure. Samsung Electronics Co., a world leader in computer memory chips, flat screen televisions and mobile phones, is the group's flagship enterprise.

Besides the slush fund and art claims, investigators are looking into long-simmering allegations of murky dealings involving the group's ownership structure.

Those focus on claims by a citizens group going back more than a decade that Samsung used shady bond deals to ensure the passage of corporate control from Lee to his son, currently an executive at Samsung Electronics.

An appeals court last year upheld a lower court ruling that found two Samsung executives guilty of selling bonds convertible to shares to Lee's children at prices less-than-market value. They have appealed to the Supreme Court.
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