A Seoul court sentenced a former health minister to 2 1/2 years in prison Thursday for exerting undue influence to back a controversial merger of Samsung Group in connection with the scandal that removed President Park Geun-hye from power and landed Samsung’s de facto leader in jail.
Moon Hyung-pyo, health minister from 2013 to 2015, was convicted of abuse of power and perjury in a ruling that is likely to deal a heavy blow to Park and Lee, who are standing trials of their own for a suspected money-for-political support deal surrounding the merger.
“Moon severely violated the independence of the National Pension Service by wielding pressure through the Welfare Ministry officials, which is subject to much criticism,” the Seoul Central District Court said in its verdict.
Moon Hyung-pyo, health minister from 2013 to 2015 (Yonhap)
According to the court, Moon pressured the pension fund, South Korea’s largest institutional investor under the auspice of the ministry, to vote in favor of the merger of Samsung’s two affiliates, Samsung C&T and Cheil Industries, in 2015. NPS was the single largest shareholder of C&T.
The deal was highly controversial, as it was widely seen as a key step for Lee to consolidate his control over the nation’s largest conglomerate and ensure the smooth transfer of Samsung’s leadership from his ailing father, Chairman Lee Kun-hee, to himself.
In return for the government’s backing, Lee is suspected of offering donations to entities controlled by former President Park’s longtime friend Choi Soon-sil and generous sponsorship of Choi’s daughter Chung Yoo-ra for her equestrian training abroad. Lee, Park and Choi have all denied any wrongdoing.
But the verdict does not include the bench’s judgement on whether Samsung offered bribes in return for the policy favor or whether Park gave Moon a direct order to sway the vote in favor of Samsung Group.
The court also handed down a 2 1/2 year jail term for Hong Wan-sun, the former head of the NPS’ asset management division, for inflicting losses to the pension’s subscribers. The scheme is mandatory for all salaried workers in South Korea.
The prosecution had sought a seven-year prison term for both Moon and Hong, saying the Samsung merger is the core of the corruption scandal.
The conviction of Moon and Hong is likely to adversely affect the ongoing trial of ex-President Park and Samsung’s Lee.
The prosecution believes that Park, through her Presidential Secretary An Chong-bum, directed Moon to wield influence on the Samsung merger. Moon had also spoken of an order from Park.
Park is now on trial for soliciting or being promised bribes totaling 59.2 billion won ($52.7 million) from local firms including Samsung.
The ruling is also likely to further raise questions over the legitimacy of the merger of the two affiliates. Samsung C&T’s shareholders, including American hedge fund Elliot Management, had opposed the merger, saying its unfair merger ratio hurt the interests of minority shareholders
Pharmaceutical company Ilsung filed a suit against Samsung C&T to invalidate the merger, with the trial underway and the final hearing to be held July 17.
Park was impeached on Dec. 9 by the parliament over the scandal, which triggered massive street protests for weeks. The decision was upheld by the Constitutional Court in a unanimous ruling on March 10.
Park, who is in detention, is fighting a total of 18 charges including bribery, abuse of power, coercion and the leaking of government secrets.
By Ock Hyun-ju (laeticia.ock@heraldcorp.com)
