Samsung's slush fund valued at $216 million, says former legal executive

We're not sure what Samsung did to invite the wrath of Kim Yong-chul, nevertheless, the former Samsung legal executive is blowing his whistle... again. In a national news conference televised in South Korea this morning, Kim stated that "Samsung has created a large-scale slush fund" valued at some 200 billion won (about $216 million). According to Kim, the fund was used to routinely bribe prosecutors and politicians in hopes of making the investigations into Samsung's improprieties go away. Last week, South Korea's parliament voted to allow an independent counsel to investigate the Samsung group in addition to improper payments -- including a congratulatory election victory "gift" -- made to South Korea's residing president, Roh Moo-hyun. Roh, who denies the allegations, is considering vetoing the bill according to a statement made by his office. Unlike typical boasts of Samsung world's firsts, this certainly isn't the first case of a corporate slush fund. However, with Samsung controlling nearly 20% of South Korea's GDP, it has legs to become the world's most notorious case of political-industrial corruption in recent years.

[thef1re @ Nov 26th 2007 5:10AM]

"Samsung controlling 20% of South Korea's GDP".

WOW. Bet you didnt know that Apple controlling 20% of USA's GDP.

[LordFarkward @ Nov 26th 2007 5:15AM]

no i didn't. i only know facts.

[Tony @ Nov 26th 2007 12:28PM]

Bet you didn't know that the fruit is more important than Steve Jobs.

[casio1234 @ Nov 26th 2007 6:53AM]

Samsung does control a very large value of Korea's GDP and although it would violate the rule of law, it would be disastrous for a company like Samsung to go down.

BTW Yung-chul Kim was sacked because (allegedly) he was incompetent. Samsung, if my Korean is up to scratch, offers all former employees an opportunity of one year, paid, to look for other employment (basically a bribe for you to shut up and correct me if I'm wrong). Apparently, YCK, because he was incompetent, did not r/c any of this benefit. Thus like a greedy/angry man, he comes out with this 'explosive' claim.

[Smiley @ Nov 26th 2007 6:57AM]

"However, with Samsung controlling 20% of South Korea's GDP..."

Actually Reuters state "...about one-sixth of the country's gross domestic product..", which is closer to 15%.
You're doing nothing more than glorified copy/pasting here. You could at least get that right.

[Thomas Ricker @ Nov 26th 2007 8:12AM]

20% is widely cited as the percentage in the foreign press. I chose that number as a carryover from this story:

http://english.chosun.com/w21data/html/news/200706/200706290023.html

Nevertheless, i've softened it to read "nearly 20%." If you find me an official number, then I'll update again.

Thomas

[Smiley @ Nov 26th 2007 8:30AM]

Hey, it looks like you nailed me there! You were right. My apologies then.

I don't have "better" or official numbers, although I remember having read 17% more than once. Incidentally, googling "Samsung Korean GDP" will return this very page ranked as 4th. Creepy.

[Igor @ Nov 26th 2007 11:58AM]

According to Wikipedia the GDP of South Korea ist 1,196 Trillion and according to the same source the revenue of the Samsung Group is 158 Billion. In total that would make 13,2%. I guess, the ~15% were more accurate.

[grumble @ Nov 26th 2007 1:47PM]

It's true that bribery and favor-buying is business as usual in South Korea, as it is in Japan, China, and Taiwan.

What makes the current Samsung scandal unique though is that the Lee family, which controls Samsung, has been actively stealing from the company to 1) purchase expensive art works (e.g. "Happy Tears" by Roy Lichtenstein), 2) funnel illegal campaign funds to candidates of the Lee family's personal likings (i.e. the conservative Hannara Party), 3) illegally transfer ownership of controlling shares from Lee to Lee's son without paying taxes, and 4) bullied banks (one is Woori Finance Holdings - NYSE: WF) into handing over details of financial transactions made by Samsung employees to and from their personal accounts who were thought to be trying to form a union - a clear violation of privacy laws.

(Lee family owns less than 5% of Samsung. Funds siphoned by the Lees from Samsung Electronics alone is thought to be greater than $10 billion, which means that the Lees stole at least $9.7 billion from outside shareholders.)

It should be noted that while other Korean conglomerates such as LG and Hyundai have been known to provide illegal campaign fundings, they always did it to gain land government contracts or lobby for favorable changes in regulation, not to move the country in political direction of the founding families' likings.

[Sirocco @ Nov 26th 2007 7:39PM]

This doesn't seem relevant to my nonstop multimedia buzz.