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South Korean prosecutors probe Elliott as it fights back for compensation

Activist investor Elliott Management is being probed by prosecutors in South Korea, over the fight it initiated to oppose the merger of Samsung C&T and Cheil Industries in 2015.

Meanwhile Waterstones owner Elliott has revealed it is seeking compensation from South Korea, for damages which it alleges it suffered when the country's former government intervened in the merger.

An official with the South Korean prosecutors confirmed today that they were examining whether Elliott breached disclosure rules when it acquired shares in Samsung through total return swaps.

Read more: Samsung posts record profits but investor hopes go up in flames

The eventual merger of Samsung and Cheil in 2015 prompted a huge corruption scandal in the country, which resulted in Samsung's vice chairman Jay Y. Lee walking free from prison last month after his bribery sentence was suspended, and former president Park Geun-hye – South Koreas first female leader – sentenced to 24 years behind bars after being found guilty of bribery and abuse of power.

Earlier this week, Elliott noted "with concern" that details of South Korea's "confidential and long-dormant investigation" into its dealings during the Samsung merger "were suddenly leaked to the press just hours after Elliott confirmed that it is seeking compensation relating to the unlawful intervention by the former administration".

Elliott, run by billionaire Paul Singer, had tried to prevent the merger of Samsung and Cheil in 2015, saying it was unfair and would tighten the founding family's grip on the business.

Samsung narrowly won the shareholder vote, helped by the government-backed National Pension Service (NPS) which pushed investor support over the line.

Elliott had built up a stake of around seven per cent in Samsung, and said the former administration's shove to help the merger go through caused it to incur significant damages.

Read more: Samsung's brand perception is at a high after the release of new S9 device

"The facts revealed since the 2015 merger are clear: the web of corruption
reaching from the president herself down to the NPS, unfairly damaged Elliott
and other Samsung C&T shareholders," the firm said in a statement.

It added that these actions breached the United States-Korea Free Trade Agreement, and that it deserved damages.

Elliott has fully cooperated with the Seoul Southern District Prosecutors Office, the firm said, claiming that prosecutors chose not to file any enforcement action after examining the issues.

It added: "Elliott also notes that this investigation has been pending since 2015 yet has now once again suddenly been thrust into the spotlight only when Elliott is publicly trying to vindicate its rights and the rights of minority shareholders generally."

Read more:Provident Financial moved into the crosshairs of activist giant Elliott Advisors

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