Published: Thu, January 19, 2017
Hi-Tech | By Merle Christensen

Seoul court considers arrest of Samsung de facto head

Seoul court considers arrest of Samsung de facto head

South Korean prosecutors are seeking the arrest of Samsung Group heir Lee Jae-yong over allegations of bribery involving President Park Geun-hye.

Prosecutors said Monday they would seek an arrest warrant for Lee on suspicion of bribery, embezzlement and perjury in connection with the scandal, which has already seen President Park impeached. A South Korean court will review the request on Wednesday and he is expected to appear before a judge who will take a look at the validity of calls for his arrest. They needed the support of the National Pension Service, the world's third-largest pension fund and a major Samsung shareholder, and prosecutors allege that Choi put pressure on the fund to support the deal - which it did.

A special prosecution team was established in December to investigate whether Samsung and other chaebol business groups contributed money to Choi Soon-sil, the Park confidant, in exchange for political favors.

"Samsung is a global company and this scandal will tarnish its brand globally", said Jung Sun-sup, head of corporate watchdog Chaebul.com, to the Financial Times in Seoul.

South Korean prosecutors say they have enough evidence to support their charges against President Park and Choi as "co-conspirators sharing profits" in the bribery. Moon Hyung-pyo, the administrator of the pension fund, was arrested a month ago on charges that he unlawfully constrained the reserve to back that merger when he was South Korea's Health Minister. "We are sure that the court will make a wise decision".

Samsung avoided what could have been a stunning fall for the princeling of the country's richest family who has been groomed to lead South Korea's most successful company.

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The spokesman said Lee was charged with having provided about 43 billion won (36 million US dollars) for Park's longtime confidante Choi Soon-sil.

If the court upholds the impeachment, a presidential vote will be held in 60 days, with Park immediately losing executive privilege that protects her from criminal indictment.

As others have pointed out, Lee's arrest likely wouldn't have a big effect on the day-to-day operations of the various businesses that make up the Samsung Group, even if it sidelines him for the time being.

Prosecutors have homed in on Samsung's contributions to entities linked to Ms. Choi, including a 1 billion-won horse for her daughter and millions of dollars for riding lessons.

Samsung came under criticism at that time, particularly from NY hedge fund and activist shareholder Elliot Management, who tried, unsuccessfully at the time, to block the deal.

Conglomerates are accused of giving a total of $70 million to two foundations run by Choi, ostensibly sports and cultural charities. Lee's legal issues could ultimately slow down larger strategic decisions at Samsung.

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