Samsung Group’s corporate offices in Seoul, South Korea, have been raided by prosecutors in an ongoing investigation against South Korea’s president Park Geun-hye and her involvement in extorting money from major corporations.
The raid took place alongside another at the national pension fund, which according to a local report from the Yonhap News Agency, may have been pressured into supporting a controversial Samsung merger in 2015. The fund’s approval is regarded as vital to the merger’s success, and a surprising move at the time, due to allegations it benefitted the Samsung Group’s controlling family more than the shareholders.
President Park has been accused of assisting in an extortion scheme with unofficial presidential aide Choi Soon-sil. More than 50 businesses were allegedly pressured to make donations potentially worth $69 million to sporting foundations backed by Choi, which were set up following the Samsung merger, then used for personal financial gain and in exchange for as-yet unknown deals. The scandal has dominated Korean news.
For Samsung, it’s the latest embarrassment in a problematic year, which may get worse. The Galaxy Note 7’s demise over safety concerns is expected to cost the company billions, and has left it not only with a hole in its device range, but also a PR nightmare as buyers question whether to remain loyal to the brand. Soon after the Note 7’s failure, Samsung recalled millions of washing machines for similar safety reasons.
“Samsung has become an embarrassment to Korea, where saving face is still a factor in reputation management,” a crisis management expert told The Guardian, adding the firm’s board must, ”firmly take charge of the company’s direction,” at this crucial time. It’s not the first time Samsung has been raided in relation to the investigation into Park and Choi either. Another took place earlier in November, and prosecutors will call executives in for questioning related to the case in the near future.
Samsung Group is the largest family-owned business conglomerate in South Korea, and is the parent company to Samsung Electronics, Samsung Heavy Industries, Samsung Financial Services, and various other Samsung companies.