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Samsung, pension fund raided over the conglomerate's merger deal

All Headlines 10:32 November 23, 2016

SEOUL, Nov. 23 (Yonhap) -- Prosecutors on Wednesday raided Samsung's headquarters and South Korea's state-run pension fund over allegations that the presidential office influenced the pension fund's decision to back Samsung's merger plan last year.

The National Pension Service (NPS) -- which held an 11.6 percent stake in Samsung C&T Corp. and a 5 percent stake in Cheil Industries Inc. -- played a key role in the two units' merger.

Prosecutors are investigating whether President Park Geun-hye pressured the state fund to support Samsung in return for favors given to her close friend Choi Soon-sil, who was indicted Sunday on a string of corruption charges.

The prosecution said it confiscated computer hard drives, cell phones and related documents at the NPS headquarters in Jeonju, some 240 kilometers south of the capital, and its branch office in southern Seoul.

Among the four places searched, Samsung Group's department for future strategy, located in its headquarters in southern Seoul, was also included. It marked the third time the country's largest family-run business group has been raided over the latest scandal surrounding President Park and Choi.

Last year, then Samsung C&T, the group's construction arm, successfully merged with Cheil Industries, the then de facto holding firm of the conglomerate.

At the time, Samsung had faced a strong challenge from individual shareholders, led by U.S. hedge fund Elliott Associates over the merger plan. The deal was widely seen as an attempt to smoothly transfer the power from group owner Lee Kun-hee to his son, Jae-yong.

The NPS' backing for the merger drew criticism as its decision was not reviewed by an independent panel which advises the state fund in exercising voting rights for invested firms.

Prosecutors have been questioning a number of leading executives at Samsung, including Samsung Electronics Co.'s Vice Chairman Lee Jae-yong, the heir apparent of the family-run group.

Prosecutors suspect that the group gave 3.5 billion won (US$3 million) to a company in Germany owned by Choi and her daughter Chung Yoo-ra, under the name of a consulting arrangement, last year to fund Chung's equestrian training.

Samsung also gave another 20.4 billion won to two nonprofit foundations allegedly controlled by Choi, which is the largest amount among some tens of billions of won donated by 53 companies from 19 business groups in the country.

Samsung, pension fund raided over the conglomerate's merger deal - 1

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