Ex-Samsung exec accuses group of massive bribery

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SEOUL, Nov 5 (Reuters) A former Samsung Group legal executive went on live television on Monday to accuse South Korea's biggest conglomerate of operating huge slush funds to bribe prosecutors and officials.

Samsung Group then issued a 25-page rebuttal rejecting all the accusations made by Kim Yong-cheol, former head of a key legal division of Samsung Group.

''Everything Attorney Kim has said is untrue,'' Samsung quoted a high-ranking official as saying.

At his news conference, Kim said he wanted to blow the whistle on corruption and reveal a list of Samsung executives he ssid operated secret slush funds. He did not produce the list.

Kim charged the company with paying off politicians, members of the judiciary and bureaucrats in order to avoid legal scrutiny of affairs involving company management under chairman Lee Kun-hee and the transfer of his wealth to his children.

''Prosecutors were only a small group that Samsung was managing,'' Kim said. ''It was on a much larger scale with the Ministry of Finance and the National Tax Service.'' Kim added that most Samsung affiliates held slush funds worth billions of won, and that most high-ranking executives had their accounts stuffed with cash to be used for regular bribes.

''Samsung offered bribes up to three times a year, in amounts of 5 to 20 million won,'' Kim said.

Kim made his nationally televised comments in a packed Seoul church, where he said he was being supported by priests.

A spokesman for President Roh Moo-hyun said his office was watching the case closely.

Samsung wields enormous power in South Korea by its sheer size. Samsung Group, with 58 affiliates as of late June, had combined sales of 9 billion in 2006, about one-sixth of the country's gross domestic product for the year.

The accusation is the latest in a series of scandals highlighting governance problems inside South Korea's family-owned conglomerates, also known as chaebol.

Samsung Group is South Korea's largest and controls swathes of the country's business including Samsung Electronics, a global brand and the world's top maker of LCD screens and memory chips.

In October 2005 a Seoul court found two top group executives guilty of conspiring in a 1996 deal to help Lee's children buy a majority stake at below-market prices in the amusement park operator Everland through the transfer of convertible bonds.

''I myself participated in the falsification (of testimony),'' Kim said.

Samsung has appealed against the finding.

Everland is at the heart of a net of cross-shareholdings between affiliates that includes Samsung Electronics.

Many South Korean newspapers, news agencies and financial analysts have said chairman Lee has been trying to pass control of the conglomerate to his son.

REUTERS SLD DS1417

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