Samsung Unit Indicted on Campaign Fraud Charge

In a widening probe of campaign fraud by South Korea-based companies, a federal grand jury Wednesday indicted Samsung America on a charge of illegally funneling contributions to California Rep. Jay C. Kim.

A month ago, two other Korea-headquartered companies, Hyundai Motor America and Korean Air Lines, pleaded guilty to similar charges and paid fines totaling $850,000, the largest ever levied for campaign finance fraud.

Assistant U.S. Atty. Stephen A. Mansfield said Samsung America has agreed to plead guilty to one count of making an illegal corporate contribution to the 1992 Jay Kim for Congress Campaign Committee and will pay a $150,000 fine.

Corporations and foreign nationals are prohibited from contributing to a candidate running for a federal office.

In the Samsung case, the company admitted using five employees as conduits for a $10,000 contribution to Kim. Each employee was reimbursed $2,000 in cash.

“Samsung America acted without the knowledge of its corporate parent and deeply regrets having failed to comply with federal election campaign laws in attempting to support the candidacy of a Korean American,” said company attorney Brian Sun.

Kim, a Republican from Diamond Bar, is the first Korean American elected to Congress.

Samsung America promised to cooperate with the FBI and the U.S. Postal Inspection Service in an ongoing investigation of campaign fraud. Korean Air Lines and Hyundai have also agreed to cooperate.

Mansfield declined to identify any other targets of the probe or to indicate whether other indictments were imminent.

Kim’s campaign financing came under federal scrutiny three years ago after The Times disclosed that he had bankrolled much of his first congressional campaign with money from his own firm, JayKim Engineers Inc.

Now seeking his third term, Kim has not been charged with any crime.

In a statement from his campaign office, Kim said: “Neither my campaign nor I had any knowledge that Samsung America reimbursed the personal contributions of its employees. As this was an internal corporate action, there is no way my campaign or I could have known about such reimbursements.”

The indictment of Samsung America coincides with a major political corruption scandal in South Korea where Lee Kun Hee, chairman of the parent Samsung Group, is one of eight industrial tycoons on trial for allegedly paying $370 million in bribes to former President Roh Tae Woo.

At a court hearing this week, prosecutors demanded a three-year prison term for Lee, who is accused of contributing $32.6 million to a slush fund controlled by Roh.

In return for the bribes, South Korean prosecutors say, the family-controlled conglomerates, or chaebol, won government favors that enabled them to freeze out competitors and dominate the South Korean economy.

“The practice of making ‘donations’ was part of a political climate that was customary and particular to a specific period in our history,” Samsung said in a statement after the scandal erupted last year.

Samsung operates 55 companies worldwide that make everything from ships to semiconductors to shampoo. It employs 180,000 workers. For 1995, the company reported sales of more than $75 billion--equal to about 18% of South Korea’s total economic output--and earnings of $3.4 billion.

In the United States, Samsung televisions, videocassette recorders and microwave ovens are among the company’s most well-known products. Recently, Samsung unveiled plans for construction of a $1.3-billion computer chip manufacturing plant near Austin, Texas.

Samsung America, based in Ridgefield Park, N.J., is involved in a variety of enterprises, ranging from men’s fashions to electronics.

Kim represents the predominantly Republican 41st Congressional District, straddling Orange, San Bernardino and Los Angeles counties in the Inland Empire. Until the campaign funding scandal broke, his was a classic immigrant success story. Born in Korea, he came to the United States at age 22, worked at menial jobs and earned advanced degrees in civil engineering and public administration.

In 1976, with a Small Business Administration loan, he started JayKim Engineers, winning contracts for the design of highways, water reclamation plants and other government projects. At one time, his firm employed 170 workers in five offices in California and Arizona.

He launched his political career in 1990 when he won election to the Diamond Bar City Council. Two years later, he was elected to Congress.

Company records subsequently obtained by The Times showed that during the 1992 congressional campaign, JayKim Engineers provided Kim with free space for his campaign in Diamond Bar, as well as staff and office supplies. The firm also paid campaign bills ranging from airline tickets to telephone services.

In the 1994 GOP primary, Kim won with only 41% of the vote, taking advantage of a crowded field that divided the opposition vote. He easily trounced his Democratic opponent in the general election with 62% of the vote.

In this year’s primary, the opposition has closed ranks around a single candidate, Bob Kerns.