Samsung Officials Worried About Possible Appointment of Special Prosecutor

The Samsung Group remained silent about a bill proposing a special prosecutor be appointed to look into Samsung slush fund allegations yesterday.

Samsung officials said, “It is like being hit by an atomic bomb while we are trying to pick up the pieces in the wake of smaller bombs.” They are expecting the bill to cause considerable disruption to their operations.

Regarding the decision on the appointment of a Samsung special prosecutor, which could go on for as long as 180 days, business experts said the bill could put a damper on the new government’s business policies and possibly take a toll on other companies.

A major wrench thrown into 2008 business plan-

Samsung insiders seem to be thrown for a loss by the proposal, and some say, “This was an unexpected occurrence in the run-up to the presidential election.”

An official from the company said, “What we were most worried about was lawyer Kim Yong-cheol’s false revelations being politicized, and that is what is happening now. For now, it seems like there is nothing we can do about it. The gist of the bill is an attempt to scrutinize our company without solid evidence. This is ridiculous.”

The company is increasingly worried about overall disruptions to its year-end financials and plans for next year from the proposed bill.

A company director said, “We are already faced with many unfavorable factors, such as rising oil prices and the strong won. Making matters worse, we are bothered by the bill. We can’t come up with a business plan for 2008. Our management personnel plan has come to a complete stop.”

Samsung subsidiaries with heavy overseas activities are concerned over the damage the act could do to their corporate images, irrespective of the Samsung Group’s involvement.

An official from Samsung Electronics said, “Samsung slush fund news is covered by the foreign media everyday. And numerous clients are calling us every day to learn about the allegations. Overseas employees are having a hell of a time explaining what is going on.”

Problems for the future-

Business leaders are concerned that if passed, the act could prove to be a major stumbling block to a new government’s economic policies.

One business observer pointed out, “Special prosecutors can start working by the end of the year at the earliest. The probe could last as long as 180 days. The first half of 2008 should be a time when the new government comes up with its business policies. But more likely than not, the government will await the findings of prosecutors before announcing any business policy.”

Some say the spillover effect of special prosecutors can go well beyond Samsung into other businesses.

A senior official of the Federation of Korean Industries said, “Regardless of Samsung’s involvement in the scandal, the appointment of a special prosecutor could produce a negative image of Samsung and prompt anti-business sentiment nationwide.”

Another official criticized, “Corruption talk surrounding Samsung is being politicized in the presidential election. I am under the strong impression that businesses are falling victim to politicians again.”

A senior fellow from a private economic research institute emphasized, “If negative perceptions of the Korean business environment spread, Korea could suffer from a ‘Korea discount,’ undermining its national competitiveness. It is not desirable for the issue to be used as a political tool.”

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