Scandal puts South Korea tycoons in the dock

[SEOUL] The publicity-shy heads of South Korea's largest conglomerates faced their worst nightmare on Tuesday - being publicly grilled about possible corrupt practises before an audience of millions.

The eight men slated to appear before a televised parliamentary probe into a scandal engulfing President Park Geun Hye are among the wealthiest and most influential in the country.

Their giant family-run corporations, or "chaebols", which include household names like Samsung and Hyundai, have dominated the export-driven direction of Asia's fourth largest economy for decades.

All eight face questions about tens of millions of dollars their companies donated to two dubious foundations controlled by Choi Soon-Sil, a close friend of the president.

Ms Choi is now awaiting trial on charges of coercion and abuse of power - accused of leveraging her ties to Park to strong-arm the chaebols into funding the foundations and then siphoning off cash for her personal use.

Prosecutors have named the president as a suspect in their investigation, citing evidence suggesting she colluded with Ms Choi in coercing the "donations" out of the companies.

The chief question the tycoons face is whether the money was provided on the understanding of some reciprocal favour or reward - making it an act of bribery.

The witness list reads like a who's who of South Korea's business elite - Samsung Electronics vice-chairman and chief-in-waiting Lee Jae-Yong, Hyundai Motors chairman Chung Mong-Koo and Lotte chairman Shin Dong-Bin, among others.

The only precedent for such a gathering was in 1988 - a year after the restoration of a presidential democracy following decades of military rule.

In that case, the chaebol heads were questioned by lawmakers over donations they had made to another foundation - essentially set up as a slush fund for former military strongman Chun Doo-Hwan.

That was 28 years ago and chaebol heads are unused to being questioned or held accountable by anyone - even their shareholders.

But the ongoing scandal that looks set to cut short Park Geun-Hye's presidency has seen a shift in public opinion, and lifted a lid on simmering anger over widening income gaps and resentment at the gilded life and privilege of the country's political and business elite.

A number of the business leaders being grilled Tuesday have fallen foul of the law before, including Hyundai's Chung Mong-Koo, who was convicted of embezzlement in 2007.

Some have received heavy jail terms, only to be pardoned or released on early parole in light of their "past contributions" and importance to future economic prosperity.

Samsung - the South's largest business group - made the biggest contributions of 20 billion won (S$24.11 million) to Ms Choi's foundations, followed by Hyundai, SK, LG and Lotte.

Prosecutors have raided the headquarters of Samsung and other groups for any evidence that they received policy favours in exchange for their contributions.

Samsung is separately accused of funnelling millions of euros to Ms Choi to bankroll her daughter's equestrian training in Germany.

As part of the widening probe, prosecutors are also investigating whether Samsung lobbied officials at the state pension fund for their support over a contested merger deal last year.

AFP