South Korean President impeached, Samsung accused of bribery

In case you weren’t aware, a dramatic soap opera has been playing out in recent months at the highest levels of South Korean politics. Involving corruption, bribery, shamans, show horses, secret societies and all manner of other peculiarity, the situation has finally resulted in the impeachment of President Park Geun-hye amidst allegations that seven Korean conglomerates including Samsung are guilty of bribery.

The corporations are accused of accepting “government favors in relation to duty-free licenses” following bribes paid either to the President or her controversial “advisor” Choi Soon-sil. Choi has been accused of manipulating and controlling the President for years and has long been suspected of using her close relationship with the President for personal gain. If you need a primer, read this.

The impeachment motion said that “considering the wide range of the president’s authority, a total of 36 billion won ($30.9 million) given by Samsung, SK and Lotte is viewed as bribery, as they have direct interest in succession, special pardons and duty-free business rights”. Prosecutors are expected to re-summon the leaders of the businesses accused of bribery, with potentially dire consequences.

“The possible prosecution of business heads by the special prosecutor will be critical to the companies. If group chiefs are prosecuted for bribery, they may face challenges in holding on to financial affiliates by losing their eligibility as a major shareholder,” professor Chun Sung-in of Hongik University told The Korea Herald.

Samsung’s heir-apparent Lee Kun-hee, recently appointed to the board of directors, faced a grueling parliamentary examination in front of Korea’s National Assembly on Tuesday, facing 80 percent of the questions directed at the assembled business leaders.

It was a pitiful public appearance for the reclusive man expected to assume control over Samsung’s sprawling empire upon the passing of his father Lee Kun-hee. Although no new facts were uncovered during the hearing, the President’s impeachment will undoubtedly reveal new angles for prosecutors to pry into.

It goes without saying that the last thing Samsung needs right now is a political scandal at the highest levels of its executive branch. At this stage it is impossible to forecast how it might affect the company as a whole. But this story is so far-ranging that Samsung’s role in it is just a small part of the broader impact it will have on South Korea as a nation.

Prime minister Hwang Kyo-ahn is now the acting president of South Korea until the Constitutional Court gives a final ruling on the President’s impeachment and new leadership can be put in place. In the interim, analysts fear the effects of the political instability on investors, foreign companies and trade. The Korean economy is expected to be thrown into a “vortex of uncertainty” following the impeachment.

What do you expect to come out of this story?