Authorities detain head of South Korea′s state pension fund | News | DW | 28.12.2016
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Authorities detain head of South Korea's state pension fund

South Korea's pension chief is accused of pressuring the fund to back a controversial merger of two Samsung affiliates. Authorities are investigating whether he is linked to the current presidential corruption scandal.

South Korean authorities on Wednesday detained the head of the country's state-run pension fund as part of its corruption probe into impeached President Park Geun-hye.

National Pension Service (NPS) chief Moon Hyung-Pyo (pictured above) is accused of pressuring the fund to back a controversial $8 billion (7.7 billion euros) merger of two affiliates of Samsung, the country's largest conglomerate, in July last year.

The merger of Cheil Industries and Samsung C&T was seen by critics as a smoothing of a father-to-son power transfer, strengthening the founding Lee family's control of the group at the expense of other shareholders. The merger saw the NPS' stake in one of the companies lose an estimated hundreds of billions of dollars in value.

Moon has denied allegations but was taken into emergency detention after a key NPS official had told investigators that Moon, then head of the Ministry of Health and Welfare which runs the fund, had pressured him to vote in favor of the merger.

Investigators have two days to decide whether to seek a warrant to formally arrest Moon. Under South Korean law, authorities can only place a suspect in emergency detention for 48 hours.

Last week, investigators raided the NPS and the health ministry's offices as part of its investigation to determine whether the NPS' support of the merger was connected to the foundations backed by President Park's friend and confidant, Choi Soon-Sil.

A special prosecutor has been assigned to investigate whether Choi received bribes from Samsung in exchange for state-approval for the controversial merger.

The NPS is the world's third largest public pension fund, overseeing some 543 trillion won ($461 billion, 443 billion euros) in funds.

South Korea's political tragedy 

Choi stands accused of leveraging her personal relationship to the president by pressuring South Korea's leading firms to donate to her two foundations. That money was allegedly then siphoned off for personal use. She has been formally indicted for abuse of power and coercion.

Prosecutors have also accused Park of colluding with Choi in illegally extracted money from firms and will question the president as a subject in a criminal investigation.

South Korea's parliament voted in December to impeach Park, deeming that her position had become untenable. South Korea's Constitutional Court now has up to 180 days to decide whether to formally end her presidency. 

Park has denied any wrongdoing but apologized for carelessness in her ties to Choi.

Choi has also denied the charges currently held against her. 

dm/kl (Reuters, AFP, AP)