Han Jae-Ho/Reuters
Journalists swarm around a prosecutor Monday in Seoul outside an office of the Samsung Group chairman, Lee Kun-hee

Samsung chairman's office raided as part of inquiry

SEOUL: Special prosecutors investigating alleged corruption at Samsung Group raided the office of the conglomerate's chairman, Lee Kun Hee, and the homes of his top aides Monday, a highly unusual move in a country both proud and suspicious of the growing power of its giant family-controlled conglomerates.

While streets in Seoul were bustling with morning commuters, investigators barged into Seungjiwon, a secluded office compound on a wooded hill in central Seoul, where the reclusive chairman makes significant decisions for Samsung, as well as receives important guests.

About the same time, separate groups of investigators ransacked the homes and villas of at least five other Samsung executives, including Lee Hak Soo, the Samsung vice chairman who is the chairman's closest aide and who is living at the luxurious high rise "Tower Palace" apartment building in southern Seoul.

"The raids were necessary to collect evidence," said Kang Dong Joo, an investigator, adding that "dozens" of officials had been mobilized for the raids Monday. Kang refused to confirm domestic news media reports that the investigators had confiscated boxes of memos, letters and computer files from the chairman's office.

A Samsung spokesman said the company had no comment.

The raids were the first major actions taken by Cho Joon Woong, the top special prosecutor who began his work last week with a mandate from Parliament to investigate allegations that Lee and his aides had amassed vast slush funds to bribe politicians, prosecutors and government officials.

They were also investigating whether Lee had used dubious means to help transfer control of Samsung to his son, Jae Yong.

The widening investigation is presenting Lee with the biggest crisis yet for the $152 billion corporate empire - the largest and most profitable conglomerate in South Korea with 58 affiliates, including Samsung Electronics, the largest maker of computer memory chips and flat-panel displays in the world.

The South Korean economy is so heavily dependent on Samsung - it generated one-sixth of the gross domestic product in 2006 - that few South Koreans expect the current inquiry to lead to a break-up of the conglomerate. But at stake is the reputation of the Lee family, which is credited with creating the best-known South Korean brand name worldwide but whose insistence on father-to-son transfer of wealth and management control is questioned by many South Koreans.

Samsung has been plagued by similar allegations before. But this time, it faces an unusual foe: Kim Yong Chul, the group's former top legal adviser. He has made a series of revelations about what he calls Samsung's vast network of bribery that he said the family had used to defend the father-to-son transfer.

Samsung has denied Kim's statements, calling him a turncoat motivated by personal grudges. But some aspects of Kim's allegations have been substantiated.

A former anti-corruption aide to President Roh Moo Hyun has said that a Samsung executive once sent him a 5 million won, or $5,500, cash gift.

Acting on Kim's tip-offs, state prosecutors in late November raided the offices of Samsung Securities, a stock brokerage subsidiary of Samsung Group, and its computer centers, trying to trace bank and stock accounts allegedly opened in Samsung executives' names - sometimes without their knowledge, as claimed by Kim - and used to hide slush funds.

While wrapping up an initial stage of investigation, Park Han Chul, a senior state prosecutor, said last month that "a significant amount of secret funds has been found." He made the comment while his team was scrutinizing 1,000 accounts opened under the names of 150 former and current Samsung executives.

"Much of what Kim said has been confirmed. The basic outline of his allegations is confirmed," said Park, who barred 30 Samsung executives and others from leaving the country. But Park said at the time that more investigations were needed to find out how the slush funds were used.

Park handed over his file to the special prosecutor Cho, who has the power to examine the scandal for 105 days from last week. Cho's team opened an Internet blog asking citizens to provide leads that can help their investigation.

Parliament appointed Cho after Kim Yong Chul named senior prosecutors as recipients of Samsung bribes and questioned state prosecutors' ability to do a thorough investigation. Both Samsung and those senior prosecutors denied that there had been any bribery.

Cho did not comment on whether he planned to summon Lee.

Executives at South Korean family-controlled conglomerates have often been investigated and convicted of corruption. But the personal offices of chairmen, who are treated as elders of the economy, are seldom if ever raided.

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