Samsung Securities Raided by Prosecutors in Probe

South Korean prosecutors probing corruption at the Samsung Group raided its brokerage unit Samsung Securities on Friday and did not rule out further search and seizures at Samsung offices, an official said.

A former top Samsung legal executive, Kim Yong-cheol, this month said the country's largest conglomerate routinely bribed public officials to avoid investigations of its operations and kept a 200 billion won (US$215.4 million) slush fund.

The Samsung Group has denied all accusations of wrongdoing from its former legal executive.

"This search and seizure is about the creation of slush funds," said Kim Su-nam, a senior official on a special team of prosecutors set up to investigate Samsung. "We have determined that there were circumstances that made it most necessary to search and seize Samsung Securities," he told reporters.

Kim declined to comment on whether there would be more raids at the offices of other Samsung affiliates, citing the need for secrecy on operations to intercept possible attempts to destroy evidence.

But when asked if the main headquarters of Samsung Group would be searched, he said: "We are still reviewing that".

Samsung wields enormous power in South Korea by its sheer size. The group, with 58 affiliates as of late June, had combined sales of $159 billion in 2006, about one-sixth of the country's gross domestic product for that year.

About 40 prosecutors and special investigators entered Samsung Securities offices early on Friday and seized records and computers while trying to minimize disruption to the brokerage's daily operations, the prosecution official said.

A Samsung Securities spokesman said scores of officials from the prosecutors' office combed the company's offices but could not say how the brokerage arm was being linked to the corruption probe.

Kim Yong-cheol, who used to run a legal division but now says he wants to blow the whistle on corruption, said this month that Samsung affiliates took part in intricate arrangements to channel money to the illegal fund.

A separate team of investigators led by independent counsel is set to begin its own probe into the allegations of corruption at Samsung under a bill approved by parliament last week.

President Roh Moo-hyun, who has about three months left in office, has said he would not veto the bill.

Several top executives from the country's family-owned conglomerates, known as "chaebol", have been convicted of corruption over the years due to what critics say were cosy ties between politicians and business leaders.