Korea corporate chiefs deny seeking favors for donations

By Se Young Lee and Joyce Lee

SEOUL (Reuters) - South Korean corporate chiefs told a parliamentary panel on Tuesday that they were not seeking favors when they made contributions to two foundations at the heart of a scandal that appears poised to bring down President Park Geun-hye.

Still, the head of the GS Group, one of the nine conglomerate bosses summoned to appear at the unprecedented televised hearing, acknowledged that it was hard to say no to the government.

"It's a South Korean reality that if there is a government request, it is difficult for companies to decline," said Huh Chang-soo, who heads the energy-to-retail GS Group and is also chairman of the Federation of Korean Industries, the main lobby group for the conglomerates known as chaebol.

The bosses of conglomerates controlling revenue equivalent to more than half the country's economy were questioned over whether they were pressured by Park or a friend and aide to give money to non-profit foundations, which backed initiatives put forth by Park, in exchange for special treatment.

Park faces an impeachment vote on Friday over the scandal.

Samsung (KS:005930) Group leader Jay Y. Lee, who sat at the center of the witness table, said Park had asked him during one-on-one meetings for support for boosting cultural and sports-related developments but did not specifically request money.

"There are often requests from various parts of society including for culture and sports. We have never contributed seeking quid pro quo. This case was the same," Lee said, adding that he was embarrassed by the situation and was appearing with a "heavy heart."

Samsung donated 20.4 billion won ($17.46 million) to the two foundations, the most of any group, and prosecutors raided its offices last month.

"I will take all responsibility related to the current situation, legal or ethical, if there is any," said the 48-year-old Lee, the third-generation leader of the country's biggest conglomerate, who received the lion's share of the panel's questioning in the first two hours.

The family-controlled chaebol have long dominated Asia's fourth-largest economy, working closely with the government in a system that helped the country rebuild from the ravages of the 1950-53 Korean war but that critics say is due for reforms, including improved corporate governance and transparency.

RUNNING THE GAUNTLET

The corporate titans ran a gauntlet of media and protesters as they entered the National Assembly building that sits along the southern bank of the Han River.

None of the chaebol, which are among 53 corporate groups that gave money to the foundations, has been accused of any wrongdoing in the case, but a protestor outside the parliamentary building could be seen holding a sign saying: "Arrest the chaebol chiefs."

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Friday's impeachment vote sets the stage for Park to be the first democratically elected South Korean leader to leave office early in disgrace. Huge demonstrations have called for her to quit and her approval rating has plunged to just 4 percent.

Last week she asked parliament to find a way and a time for her to step down, an offer that was rejected by the opposition Democratic Party as a stalling tactic. Media reports said she may make a speech this week offering to step down in April, a recommendation made by her conservative Saenuri Party.

Middle school students who were leaving the parliamentary building as chaebol bosses arrived chanted "Park Geun-hye step down!" and a scuffle between metal workers' union members and men who appeared to be guards broke out when Hyundai Motor Group Chairman Chung Mong-koo, 78, arrived with his son and presumed successor, Vice Chairman Chung Eui-sun.

It is the first time such a large group of major Korean corporate chieftains has appeared for a parliamentary hearing.

"This will be a good opportunity to express corporations' position," the chairman of the Hanwha Group, Kim Seung-youn, told reporters on his way into the building.

Each witness was allowed to bring one lawyer and one company official to the hearing, and, if needed, an aide for medical support, according to a lawmaker's office.