2016 already looked to be the worst year in Samsung’s history. But in addition to selling exploding smartphones and washing machines that can break a customer's jaw, the Korean firm is now facing another crisis after prosecutors raided its Seoul headquarters as part of an anti-corruption investigation.
The incident follows media reports that Samsung made illegal payments to foundations run by a close civilian friend of Korean President Park Geun-hye.
It’s claimed that Samsung executives were asked by Park to provide donations of 3.5 billion won ($3 million) to a company run by Choi Soon-sil, who has previously been accused of exploiting her friendship with the President, to fund equestrian training in Germany for Choi's daughter.
It’s also claimed that Choi, who is now in detention, used her closeness to Park to pressure some of the country’s top organizations, including Lotte, Hyundai Motors, and SK, into donating millions of won to her foundations.
“If prosecutors find hard evidence proving Samsung provided a huge amount of money to Choi Soon-sil and her daughter, it would be a serious blow to Samsung,” Park Ju-geun, head of corporate watchdog CEO Score, told the Financial Times. “Legal action from shareholders could follow and Samsung would suffer from a crisis of consumer confidence.”
Earlier this week, Samsung took out a full-page ad in three national newspapers to issue a public apology for the Note 7 debacle, which has done a huge amount of harm to the company’s reputation and finances.
Samsung hasn’t just been dealing with the fallout from its exploding smartphones; the company recalled 2.8 million of its US washing machines recently, following over 700 reported cases of the top of the machines detaching and flying off.
Samsung has declined to comment due to the ongoing investigation.