Samsung’s former chief attorney Kim Yong-chul has publicly accused Samsung of “improper accounting methods to create more than Won 7 trillion [US $7.5 billion] in slush funds” and “regularly bribing prosecutors, judges, high-ranking government officials, journalists and scholars to deflect criticism over the group’s illicit stock deals to transfer ownership of the group from the chairman to his son”, writes the South Korean news agency Yonhap. According to the International Herald Tribune (IHT) Mr Kim also alleges that a “family member of Samsung Group Chairman Lee Kun-hee used 60 billion Won [US $65 million] of the money to buy expensive art work.” The IHT also reports Samsung as saying “that he [Kim] was turning against Samsung out of “personal grudges””.

The Associated Pressquotes Chu Woo-Sik, Head of Investor Relations at Samsung Electronics, as dismissing the matter as, “nothing to worry about”. In a statement reported in the Financial Times (FT) the group asserts that, “There can’t be irregular accounting because Samsung group’s affiliates have conducted accounting in accordance with global standards.” However, Mr Kim (Samsung’s former chief attorney) claims that Samil PricewaterhouseCoopers, responsible for auditing the group, were bribed by Samsung to “cover up the book-keeping shenanigans” ( Yonhap); an allegation the accountancy firm refutes as being “completely groundless” ( FT).

The scandal has widened as others have stepped out to add support to Mr Kim’s allegations. The FT details how another whistleblower, Kang Bu-chan, who was a general manager at Samsung SDI’s United States unit, claims “that he had managed a Won 300bn [US $326m] slush fund between 1992 and 1999.” While a former legal adviser to South Korean President Roh Moo-hyun, Lee Yong-chul, has released photographs he says supports his claims that Samsung tried to bribe him ( FT).

On 23 November, the country’s national assembly passed legislation for an independent counsel to head the investigation into the corruption allegations, arguing that “state prosecutors could not be trusted because they were also accused of taking bribes from Samsung” ( The New York Times). The special counsel is not expected to be operational until mid-December. According to Bloomberg, following Mr Roh’s announcement “seventeen traded units of Samsung Group lost Won 4.85 trillion [US $5.21 billion] in combined market value.”

On 30 November, South Korean prosecutors “raided Samsung Securities Co. [a financial arm of the Samsung Group] as part of their probe into allegations Samsung Group amassed slush funds to bribe government officials” ( Bloomberg).

Na Seong Lin, an economist at Hanyang University in Seoul, notes that “Samsung is the spine of the economy. If it shakes, the economy shakes” ( IHT), underlining just how important the case is for those that view it as “a litmus test of whether South Korea's relatively youthful democracy and judicial system are ready to crack down on the white-collar crimes of family-owned conglomerates, called chaebol in Korean” ( Yonhap).