How ties to an 'equestrian princess'
landed Samsung at center of a scandal
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[December 30, 2016]
By Ju-min Park and Miyoung Kim
SEOUL (Reuters) - Samsung Electronics Co's
<005930.KS> sponsorship of the equestrian-athlete daughter of a
long-time friend of President Park Geun-hye has helped to land South
Korea's top company in the center of the country's influence-peddling
scandal.
Samsung agreed last year to pay $18 million to Core Sports International
GmbH, a consulting firm controlled by Park's friend Choi Soon-sil, who
is in jail and faces charges of abuse of power and fraud in a criminal
trial that began this month.
A South Korean court has also issued an arrest warrant for Choi's
Germany-based horse-riding daughter, 20-year-old Chung Yoo-ra – who has
been the main beneficiary of the sponsorship – for alleged criminal
interference related to her academic record, and other unspecified
charges.
The sponsorship deal is being examined by prosecutors as they try to
ascertain whether Samsung, which was also funding and chairing the Korea
Equestrian Federation (KEF), sought favors from Choi and President Park
in return for funding initiatives backed by them. In particular, they
are looking at whether favors included the National Pension Service'
support for Samsung’s founding family in a shareholder vote last year.
"A crucial part of our investigation is to look into why Samsung and the
KEF supported Choi Soon-sil and her daughter Chung Yoo-ra and
transferred funds to companies set up by Choi or involved with Choi," an
official at the special prosecutor's team told Reuters by phone. He
declined to be identified because he is not authorized to speak with the
media.
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Park has been impeached by parliament over her role in a wide-ranging
influence-peddling scandal linked to Choi, and now awaits a
Constitutional Court review of that decision, which if upheld would make
her the first democratically-elected South Korean leader to leave office
in disgrace.
A HORSE NAMED VITANA V
Reuters has reviewed a copy of Samsung Electronics’ August 2015 contract
with Core Sports to sponsor the team at a German facility in Biblis, a
small town south of Frankfurt. Neither party announced the sponsorship.
"Samsung wishes to develop an Equestrian Team, including overseas
training of athletes to prepare for 2018 Asian Games and World
Equestrian Games," the consulting agreement says.
Samsung Electronics ended up spending about 8 billion won ($6.6 million)
on the team, which went to support Chung, according to testimony by
Samsung Group's de facto head, Jay Y. Lee, during parliamentary
testimony earlier this month.
A more precise accounting, including whether some of that funding
supported her coach and fellow rider, Park Jae-hong, was not available.
The team was meant to include six riders with 12 horses, Samsung's
contract says, but never grew beyond Chung and her coach, according to
lawmakers on a parliamentary committee investigating the presidential
scandal.
Reuters was unable to determine why the team did not expand beyond the
two riders.
Samsung's outlay included the 1 million euros ($962,000) purchase of a
horse to be used by Chung named Vitana V, according to Lee.
He told the hearing there was a reason the group felt compelled to fund
the equestrian team, but did not say what that was.
"I was told there were inevitable circumstances ... But I admit that the
deal was done in an inappropriate way and regret that I didn't look into
it more thoroughly," Lee testified. He didn't elaborate further.
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Chung was not available for comment and her lawyer, who also represents
her mother, did not return multiple requests for comment. Choi, who has
denied legal wrongdoing, told lawmakers on Dec. 26 that she had not
sought the sponsorship from Samsung. Reuters could not reach Park
Jae-hong for comment.
Samsung Electronics declined to comment for this story.
Sung-Kwan Park, a Frankfurt-based lawyer who was Core's managing
director, declined to discuss details of the deal when approached by
Reuters, citing attorney-client privilege.
SPORT FOR THE ELITE
Samsung Electronics' support for Choi-backed initiatives also included
1.6 billion won to a foundation run by Choi's niece Jang Si-ho, and
another 20.4 billion won, funding shared with the company's affiliates,
to two foundations set up by a major business lobby to support Park
policies. Prosecutors say in their indictment of Choi that they suspect
that she controlled the foundations, including choosing staff.
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![](../images/123016pics/news_q27.jpg)
An outside view of the equestrian sports farm "Reitsportanlage
Jaegerhof" in Biblis, Germany, December 19, 2016. REUTERS/Ralph
Orlowski
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Jang has said the foundation she ran was established to support
young athletes and that Choi had asked her to set it up. Her lawyer
told a court hearing on Thursday that Jang put pressure on Samsung
to sponsor the foundation, but said it was not clear that was the
reason for Samsung's backing.
Lee told lawmakers Samsung's contributions to the two foundations
backing Park's initiatives were not made with any quid pro quo
expected.
Samsung's offices have been raided twice by prosecutors but none of
its officials have been charged with any wrongdoing.
The Samsung Group, which has been a major sponsor of the Olympic
Games, has also funded a range of sports in South Korea in the past
20 years, including soccer, baseball, basketball, and volleyball.
While those sports have mass appeal, equestrian, as in many
countries, is seen as a sport for the wealthy elite – there were
just 251 registered equestrian riders in the country in 2014,
according to the KEF.
The conglomerate and its founding family have a long-term
relationship with the sport. The 48-year-old Lee, grandson of the
group's founder, is an accomplished horseman and represented South
Korea at international events, winning medals in various
competitions in the late 1980s and early 1990s.
FAKE DOCUMENTS
In 2010, Samsung pulled out of sponsoring the KEF only to return to
the sport in March 2015 when Samsung Electronics President Park
Sang-jin took over the chairmanship of the KEF.
That was at a time when the KEF was being accused by lawmakers and
local equestrian federations of granting Chung undue favors,
including selection to the national team, because of her mother's
perceived influence with Park.
In 2014, Chung was labeled the "Equestrian Princess" by South Korean
media, though she partially answered her critics by winning a group
dressage gold medal at the 2014 Asian Games.
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The KEF declined to comment, citing the ongoing investigation by
prosecutors.
Park Jong-so, a veteran rider and former national team head coach,
said many in the country's equestrian community were puzzled when
Samsung resumed its leadership of the federation.
Samsung gave 2.6 billion won to the KEF between resuming the
sponsorship and August this year, according to a document it filed
to parliament and shown to Reuters by a lawmaker.
The country's culture ministry, which oversees sports, said in a
December audit report that the KEF signed fake documents provided by
Chung to excuse her absences from high school and gain credit for
volunteer activities she never did.
The saga has left equestrian sports in South Korea in a state of
flux. Some local media have reported that Samsung has canceled the
contract with Core, which has been renamed Widec Sports GmbH.
Samsung declined to comment.
Hwang Young-shik, who won two 2014 Asian Games gold medals,
including one with Chung in the group dressage, and now trains young
riders at his own farm, said the whole saga has been embarrassing
for the sport in South Korea.
"Young riders are frustrated over this," he told Reuters, adding
that everyone in the equestrian world now "knows who Chung Yoora
is."
(Editing by Tony Munroe and Martin Howell)
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