Samsung, pension fund raided as South Korean probe widens

SEOUL, South Korea (AP) — South Korean prosecutors investigating a corruption scandal surrounding the country’s president and her friend raided a unit of the country’s largest business group, Samsung, and the national pension fund on Wednesday.

Officials at Samsung Group and National Pension Service confirmed investigators visited their offices in Seoul.

The Investment Management Office of the world’s third-largest pension fund was the target of the raid, according to an NPS official who declined to be named, citing office rules.

Samsung spokeswoman Lim Bomi declined to say which Samsung department was raided.

Prosecutors at Seoul Central District Court did not return calls seeking comment.

South Korea’s Yonhap news agency reported earlier that prosecutors were looking into whether the presidential office played a role in the pension service’s vote to support a controversial merger of two Samsung companies last year.

Samsung narrowly won shareholders’ approval to merge Samsung C&T and Cheil Industries in July 2015.

Most investors and analysts questioned Samsung’s argument that the deal was to create synergies between a Samsung construction firm and another Samsung firm that ran an amusement park and fashion businesses.

The merger deal was crucial for Samsung heir Lee Jae-yong who held a small stake in Samsung Electronics. It helped Lee, a grandson of Samsung founder and vice chairman at Samsung Electronics, strengthen his grip on the group’s crown jewel, Samsung Electronics, without spending his own money.

Shareholders who opposed the merger, including U.S. hedge fund Elliott, said the deal unfairly benefited Samsung’s founding families while hurting minority shareholders.

In the end it was National Pension Service, a major shareholder at both Samsung C&T and Cheil Industries, which played the role of king maker in the shareholder vote. The pension fund cast a vote in support of the merger even as some outside advisers recommended it oppose the deal.

The pension fund came under scrutiny for how it reached the decision to support the contentious merger. Public anger has been growing in recent weeks after one estimate showed that the value of the pension fund’s stake in Samsung C&T, the merged entity, fell by hundreds of millions of dollars.