According to sources, Samsung vice chairman Lee Jae-yong (C), SK chairman Chey Tae-won (L) and Lotte CEO Shin Dong-bin (R) were banned from leaving the country. (image: Yonhap)
SEOUL, Dec. 20 (Korea Bizwire) – The special prosecution team looking into President Park Geun-hye’s corruption scandal has put a prohibition of departure on three Korean conglomerate heads, hampering business operations planned for the year-end and the next few months to come.
According to sources, Samsung vice chairman Lee Jae-yong, SK chairman Chey Tae-won and Lotte CEO Shin Dong-bin were banned from leaving the country over allegations including contributions to the Mir and K-Sports foundations – controlled by Park’s confidante Choi Soon-sil – and making monetary donations to Choi’s daughter, Chung Yoo-ra.
The special prosecution is set to embark Wednesday on a full-scale investigation that will last 70 days, thus possibly keeping the three chiefs in South Korea until the end of February.
Key upcoming events for vice chairman Lee include the CES 2017 in Las Vegas (January 5 – 8), and the Exor SpA board meeting, scheduled for February, in which he participates as an outside director. Although he rarely made an appearance at former CES events, industry watchers said it was likely that Lee would show up next year given his new status as a Samsung board member.
But most importantly, it’s the follow-up tasks for the $8-billion acquisition of Harman International that would require personal intervention from Samsung’s heir-apparent.
The process, which was expected to wrap up by Q3 2017, faced a setback last week when Atlantic Investment Management, with a 2.3-percent stake in Harman, opposed the deal, claiming that the company is worth a lot more.
“Convincing shareholders is something that the owner needs to take care of,” said an industry official. “Chiefs of global enterprises often partake in unofficial meetings at the end or the beginning of the year for business talks.”
SK chairman Chey is likely to miss out on the annual World Economic Forum at Davos in January, at which he was a regular participant. The gathering has been providing Chey with insight into the future economy, and was also a crucial opportunity to get in touch with global business moguls and economic leaders.
Earlier this January, he participated in the forum with CEOs from other SK affiliates, discussing potential business cooperation with representatives from new and renewable energy, and petrochemical industries from around the world.
Chey’s visit to China that was planned for either before or after the WEF is threatened as well, casting doubt on whether expected talks with Sinopec officials will actually take place.
“Mr. Chey thinks very highly of the Davos forum, but we’re not sure if he’ll be able to participate next month given the official travel ban,” said an SK official. “We’re concerned that his business trip to China, a strategic foothold for SK, may also be affected.”
Meanwhile, Lotte has yet to confirm if a ban on its CEO had in fact been imposed.
“We came across the news (of the ban) through the media, but we have yet to confirm its actuality,” an official said.
If the news is true, however, the biggest drawback for Lotte would be in negotiating new terms for financial products such as bonds that the company had borrowed from overseas, as Lotte’s CEO, Shin, would be unable to make his usual end-of-year visit to investors in Japan and the U.S.
“Mr. Shin is an expert on these financial products, and has always been negotiating the deals personally,” the official added.
His role as the leader of a group that operates both in Korea and Japan is also likely to be hampered if he is barred from travelling out of the country, especially if it prevents him from taking part in the annual board meeting held at Lotte Holdings (in Japan) planned for the end of the year.
By Kevin Lee (kevinlee@koreabizwire.com)
