Seoul: South Korea’s biggest business group Samsung has informed that it may delay domestic and overseas investments worth billions of dollars until a probe into bribery and fraud allegations is completed.
“Our planned investments could be postponed,” said a senior a senior official of the group’s strategic planning office on condition of anonymity.
But Samsung Electronics, the group’s flagship, said that it would go ahead with its planned $2.2 billion (Rs8,682 crore) investment early next year to expand liquid crystal display production.
Samsung, which accounts for more than 20% of South Korea’s exports, refused to elaborate on how its 2008 investment plans may be affected but voiced concern that the high-stakes probe was hurting its reputation.
“We are worried that our image abroad can be tarnished by groundless allegations,” said another group official.
The group invested $24.5 billion, including research and development spending in the year 2007. The group also cancelled celebrations planned for Wednesday to mark Lee Kun-Hee’s 20th anniversary as chairman.
Samsung has denied allegations by its former chief lawyer Kim Yong-Chul that it had created a multi-million dollar slush fund to bribe hundreds of prosecutors, government officials and journalists.
Kim, who headed the group’s in-house legal team for seven years until 2004, has accused the group of opening bank accounts in the names of senior staff, including himself, to manage the fund.
The Finance and Economy Minister of South Korea, Kwon O-Kyu, has however urged the conglomerate to change the way it does business. Apart from an ongoing investigation by state prosecutors, an independent counsel will launch a probe expected to wind up by next spring.
Last week the headquarters and two data centres of Samsunng Securities were raided by the prosecutors to acquire evidence. This week they tracked around 20 bank accounts suspected of being used to manage the slush fund.
“Our investigation focused on the transaction histories of suspicious accounts,” said Kim Su-Nam, senior prosecutor.
Nine Samsung executives including the chairman have been barred from leaving the country. In a move to support its community member, business groups have supported Samsung’s claim that the probe could damage it overseas.
“We are afraid that the Samsung probe may hurt the credibility of our firms and economy in general abroad,” Lee Yoon-Ho, vice president, Federation of Korean Industries, said.