Earlier this week there was a small story buried deep inside the Wall Street Journal indicating that South Korean prosecutors had raided Samsung’s headquarters in the city of Jeonju. There has been no official word about why authorities are searching multiple offices of a huge multinational corporation. Samsung has $466 billion in assets.
Although many newsrooms are operating on skeleton crews during Thanksgiving, there is no shortage of information today about the raids. Korea’s National Pension Service and Samsung are now embroiled in an influence peddling controversy. The scandal is so broad that it could lead to the ouster of South Korea’s president.
News reports suggest that President Park Geun-hye’s administration pressured the state owned National Pension Service to cast the decisive votes which allowed the merger between Cheil Industries and Samsung C&T, Samsung’s construction arm.
Many people panned the merger and claimed that there were huge disparities in the company’s relative values. Investors were also upset because as structured, the son of Samsung’s chairman Lee Kun-hee was able to increase his stake in the company without any additional cost or investment.
Samsung and its leadership is no stranger to controversy. The elder Mr. Lee was sentenced to prison in 2008 and forced to step down as head of Samsung. The then South Korean president pardoned Lee and allowed him to return to power without spending even a day in prison.
The latest news for Samsung couldn’t come at a worse time. The company is already facing multi-billion losses over its Galaxy Note 7 cell phones that allegedly catch fire without warning.
Influence Peddling and the FCPA
Influence peddling and bribery of government officials is obviously illegal. Although the events happened in South Korea, American prosecutors can take action against bribery anywhere in the world if any portion of the bribery or influence peddling takes place within the United States or if the company has reporting obligations with the SEC.
Influence peddling means the use of political influence in exchange for money or favors. Under the U.S. Foreign Corrupt Practices Act (FCPA), soliciting, offering, accepting or paying bribes or favors in exchange for favorable business treatment is illegal.
Congress passed the law in 1977 in the hopes of providing businesses a level playing field and insuring that businesses do not engage in illegal or unethical behavior. Business permits, licensing and the like should be based on merit and the law and not who can pay the biggest bribe.
We suspect that many multinational corporations regularly engage in bribes and illegal kickback schemes. In some countries and industries, influence peddling almost is a normal business practice. That doesn’t make it legal, however.
If you have inside information about these activities, you may be entitled to a large cash award from the Securities and Exchange Commission’s (SEC) Whistleblower Program. Awards of up to 30% of whatever the government collects from the wrongdoer are possible. Multimillion dollar awards are common.
Our experienced SEC whistleblower lawyers’ can help evaluate your case, investigate and file your claim and protect you against illegal whistleblower retaliation claims. In the last five years we have helped our clients collect over $100 million in awards. All inquiries are confidential and protected by the attorney – client privilege.
For more information, visit our FCPA foreign bribery information page or contact attorney Brian Mahany at *protected email* or by phone at (414) 704-6731 (direct).
MahanyLaw – America’s FCPA Whistleblower Lawyers
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