Investigation into One Trillion Won Slush Fund Bearing Fruit

▽ Independent Prosecutors Uncover Samsung Group’s 1 Trillion Won Slush Fund in Hidden Accounts

Independent prosecutors have focused on Samsung Group’s alleged slush funds as their efforts are now considered to be yielding results.

The investigation team, which was formed a month ago, confirmed that the amount of money hidden in the bank accounts of executives exceeded one trillion won, most of it deposited in cash.

They summoned 30 former and current Samsung Group executives beginning with Hotel Shilla President Sung Young-mok on Jan. 18.

Prosecutors secured testimonies regarding the names and bank accounts related to the slush funds. The deposed witnesses claim that the accounts are their own but failed to explain details surrounding the establishment and management of the accounts.

Some of those who were summoned said that they had agreed to open the accounts, but discovered that multiple accounts were created later.

Investigators are speculating that Samsung may have secretly used the names of its executives.

Prosecutors raided Samsung Fire and Marine Insurance’s headquarters and its data center on Jan. 25. There was speculation that Korea`s largest non-life insurer created slush funds with insurance money intended to go to its subscribers.

Prosecutors think that attempts to destroy evidence by Samsung Fire and Marine Insurance hampered the securing of critical evidence.

The team called Samsung F&M Insurance Executive Director Kim Seung-eon and Manager Kim as its first suspects.

It remains to be seen how the investigation into the destruction of evidence will affect the slush fund investigation.

▽ Investigating “Slush Fund Art”

Independent investigators found that thousands of expensive artworks were stored in a warehouse in Everland, the Samsung-affiliated amusement park, in a raid on Jan. 21.

They focused on locating 30 pieces of artworks allegedly bought with illicit slush funds, which Kim Yong-chul, the former head of Samsung Group’s legal department, claimed in a press conference in last November, but which prosecutors have yet to yield.

Prosecutors state that the investigation into the art is not directly associated with the broader investigation. However, speculation that expensive artworks were purchased with the slush fund remains unresolved.

Hong Song-won, head of Seomi Gallery which is alleged to have bought artwork on behalf of Samsung’s chief and his wife, released Roy Lichtenstein’s “Happy Tears” on Feb. 1. The piece had been missing for some time. Hong, however, said nothing about the owner of the work, the origin of the money for the purchase, and did not say whether she had any other artworks related to the investigation.

▽ Investigation into Illegal Transfer of Wealth

With the end of the Lunar New Year Holiday, an investigation into the illegal transfer of wealth related to illegalities surrounding Samsung Everland’s issuance of convertible bonds is expected to begin.

In the Everland case, both former Everland President Heo Tae-hak and current President Park Roh-bin were found guilty in an appeals court. The case is now pending in the Supreme Court.

Samsung Card Executive Director Shin Eung-hwan, a former chief executive of e-Samsung, was summoned for the so-called “e-Samsung case.”

E-Samsung was charged for causing harm to the company and stockholders when other Samsung-affiliated companies bought its stocks at high prices to make up for the 20 billion won in losses in 2001. The company’s chief stockholder was Samsung Electronics Executive Director Lee Jae-yong, son of Samsung Group Chairman Lee Kun-hee.

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