The headquarters of Samsung Electronics – the Samsung Group's cash cow – was raided by prosecutors in yesterday as the political crisis that has gripped South Korea ensnared the country's biggest conglomerate as well. Samsung's HQ in the upscale Gangnam area of Seoul was searched by prosecutors after days of allegations in local media that the Samsung had poured in millions of euro into a foundation run by a “shaman adviser” and long-time friend of President Park Geun-hye.
Samsung hasn't really commented on the entire episode, it only confirmed that a raid had taken place and that it would “fully co-operate with the investigation.” This political scandal started when it became evident that Choi Soon-sil, a long-term personal friend of the president who holds no government position had actually been influencing presidential decisions. Ms. Park has received a lot of criticism for this and the public has been protesting daily as allegations of selling influence and corruption threaten to bring down the presidency.
Ms. Choi is now in detention. It's claimed that she used her position of confidence with Ms. Park to put pressure on major conglomerates like Samsung, SK group and Lotte to download millions of euro to foundations controlled by her. The police are now looking into claims made by local media last week that Samsung had transferred 2.8 million euro to Widec Sports in Germany which is controlled by Ms. Choi.
Apparently the money was meant to support the development of national equestrian activities prior to the Tokyo 2020 Olympics but it's alleged that most of it was spent on a horse used by Ms. Choi's daughter for training. Media reports also reveal that Samsung is being investigated for allegedly offering illicit favors to the daughter, Jeong Yu-ra.
Local media outlets have reported that prosecutors took documents related to Samsung's business with the Korea Equestrian Federation in their custody following the raid. Head of external affairs at Samsung Electronics, Park Sang-jin, was also reportedly targeted. If these allegations are proven it would further harm the company's reputation which is already reeling from the Galaxy Note 7 recall. The possibility of legal action from shareholders is something else that might keep the executives at Samsung up at night.
