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Samsung Chairman’s Wife Grilled Over Artworks

Posted April. 03, 2008 06:25,   


Prosecutors grilled Wednesday the wife of Samsung Group Chairman Lee Kun-hee on if she bought high-priced artworks with slush funds raised by the conglomerate.

Hong Ra-hee went to her first round of questioning after also being implicated in the sale of Samsung Everland convertible bonds at a giveaway price to her son.

▽ Did she buy expensive art with slush funds?

Hong arrived at the independent investigation team’s office with Samsung attorney Lee Wan-su at 3 p.m. She ignored the swarm of reporters there while entering the office, only saying, “I’ll sincerely answer prosecutors’ questions.”

Prosecutors asked Hong, the director of Leeum Samsung Museum of Art, if she had the group’s slush funds pay for high-priced paintings bought by Seomi Gallery and Kukje Gallery. They also wanted to know who owns thousands of artworks found in an Everland warehouse.

Another question was if she bought the works “Happy Tears” and “Bethlehem’s Hospital,” which are worth tens of billions of won, from Seomi director Hong Song-won.

Samsung Group Chairman Lee was also found to own shares in Samsung Life Insurance under the names of other Samsung executives. Part of the dividends paid to the chairman and the money amassed under the names of former and current executives were also used to purchase high-priced paintings.

Hong was also grilled on if she sold Everland’s convertible bonds to her son, Lee Jae-yong, at artificially low prices. A civic organization had complained that she did so while serving as director of Samsung Foundation of Culture.

▽ Final struggle

Prosecutor Yoon Jeong-seok said, “I think the investigation needs an extension for several more days.” The probe’s second deadline expires Tuesday and a third would end by April 23.

Another investigator said, “Given that each sector of the independent investigation team is struggling to reach a conclusion at the last moment, we have no choice but to extend the investigation.”

Also questioned several times were Samsung Group Vice Chairman Lee Hak-soo and top strategic planner Kim In-joo over the conglomerate’s illegal transfer of management control and sale of Everland bonds.

Samsung’s restructuring headquarters (now the strategic planning department) is found to have intervened in issuing and selling convertible bonds. Prosecutors are considering whether to indict Samsung Chairman Lee.

The investigation also confirmed that the conglomerate raised two trillion to three trillion won in slush funds under 1,300 names.

Chairman Lee is alleged to have embezzled corporate funds, so prosecutors are considering charging him with tax evasion on the money he earned through stock trading under borrowed names. Several experts, however, say he simply did not pay taxes on time.

National Intelligence Service Director Kim Sung-ho is also alleged to have accepted money from the group’s former attorney Kim Yong-chul. Kim Sung-ho will be questioned at an undisclosed location instead of at the independent investigation’s office.

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