South Korea’s former health minister was found guilty of pressuring the nation’s pension fund to support a Samsung merger that had been criticized for being overly beneficial to the company’s founding family.
The Seoul Central District Court sentenced Moon Hyung-Pyo to 2 ½ years in prison for putting pressure on the state-run National Pension Service (NPS) to give its approval to a 2015 merger between two Samsung subsidiaries.
“The fact that a Health Ministry official used pressure to damage the independence of the state pension fund is highly reproachable,” the judges said after finding Moon guilty, reported the Yonhap news agency.
The charges against Moon stem from the 2015 merger of Samsung C&T and Cheil Industries, which was seen as vital to the company’s familial leadership succession. However, the proposed merger was unpopular among a significant contingent of Samsung shareholders who criticized the deal for being unfairly beneficial to Samsung’s founding family members.
As the $508 billion NPS is a major investor in Samsung, the pension fund’s blessing was key to winning shareholder support of the merger. And the pension’s vote turned out to be the difference in the merger getting the green light.
Moon, who as head of the Health Ministry oversaw the National Pension Service, was found guilty of violating the pension’s independence by abusing his power to influence the fund’s vote. He was also found guilty of perjury during a parliamentary hearing for lying about his role in the merger.
Hong Wan-sun, a former head of the NPS’ operation division, was also found guilty and was sentenced to 2 ½ years in prison for causing damages to the fund by convincing its investment committee to support the merger. The court said Hong recommended merger approval despite knowing the merger ratio was unfair to Samsung C&T shareholders, and would therefore damage the pension fund’s stake in the construction company.
The controversy over the Samsung merger, and the allegations that the pension service was pressured to support it, helped contribute to the corruption scandals that led to the impeachment of Park Geun-hye, the former president of South Korea.