South Korean conglomerates on Thursday denied speculations of their involvement in a raging scandal surrounding President Park Geun-hye’s confidante, amid rising concerns on its ramifications on the entire business industry.
There have been growing suspicions that Choi Soon-sil, a longtime friend of President Park, or her associates might have had secret connections with the businesses in exchange for favors.
At the center of the alleged connection is the nation’s largest business lobbying group, the Federations of Korean Industries -- a combined 78.8 billion won ($68.9 million) came from its members for the establishment of the Mir Foundation and the K-Sports Foundation. The foundations are alleged to have operated under Choi.
A SK Group official denied a latest allegation raised by Hankyoreh, a local daily, which suggested that the group was asked to fund an overseas training project designed for junior athletes planned by K-Sports.
A former senior staff at K-Sports reportedly told the newspaper that he was instructed by Choi to meet officials at SK Group for a presentation on the project. The report also implicated An Chong-bum, senior presidential secretary for policy coordination, who allegedly made a follow-up call to the official on the meeting with SK, which later reportedly declined to take part.
“I was told by my seniors that this did not happen,” the SK official told The Korea Herald.
CJ Group also faced speculations that it received preferential treatment from the Gyeonggi Provincial Government over a 1.4 trillion-won theme park, a part of a mega culture project led by Cha Eun-taek, a music video producer who has a close relationship with Choi.
According to Hankook Ilbo, the provincial government allegedly extended a deadline for CJ E&M, the then preferred bidder of the project, on signing a contract to borrow the construction site at 1 percent of the actual price for up to 50 years, a special clause given to foreign-invested companies.
As a local firm, CJ was subject to pay 5 percent of the property price and to renew the contract every five years. But the government’s extension of the deadline had allegedly bought time for CJ to establish a joint venture with a Singapore investment firm, allowing the venture to become a foreign-invested firm that qualified for borrowing properties at a far lower price.
CJ Group denied the entire report, saying that extending the deadline was a part of conditions agreed with the government when it became the preferred bidder of the project. It added that establishing the venture with the Singaporean firm was planned long before, as indicated in the letter of intent the company submitted before becoming the preferred bidder.
“The theme park project was what CJ as a content-focused enterprise had been paying attention to for a long time,” said a CJ Group official. “The opportunity was clear but there was not a single preferential treatment during the course of signing the contract. The company rejected receiving any kinds of favor,” she added.
Despite the denials, business insiders are concerned about the scandal’s impact on the entire industry, stressing that it could raise the public’s distrust toward businesses, and stimulate the main opposition party’s drive on legislating more regulatory measures, including a hike on corporate tax.
“Companies should focus on reviving the economy as the ongoing political and social unrest could give more negative impact to the job market and the people’s livelihood,” said Kim Young-bae, vice chairman of the Korea Employers’ Federation.
