S. Korea prosecutors seek arrest of Samsung heir in Park scandal
Print Edition
SOUTH Korean prosecutors yesterday sought the arrest of the heir to the Samsung empire over a scandal that has seen the country’s president impeached, in the latest setback for the giant conglomerate.
Samsung, the world’s largest smartphone maker, is already reeling from the international debacle over its Galaxy Note 7, which was recalled after some devices caught fire.
Prosecutors investigating the corruption scandal said they asked a court to issue an arrest warrant for Lee Jae-yong, the only son of Samsung group chairman Lee Kun-hee.
The Seoul Central District Court said it would rule on the request tomorrow.
Samsung’s revenue is equivalent to a fifth of South Korea’s GDP and Lee’s arrest could have an “important” impact on the economy, a spokesman for the prosecutors acknowledged. “But we believe that achieving justice is more important.”
The scion is vice chairman of Samsung Electronics, the firm’s flagship subsidiary, and the de facto head of the group after his father suffered a heart attack in 2014.
If prosecuted and convicted he could face a maximum five years in prison, but leading South Korean tycoons have previously been given suspended terms for such offenses — including the elder Lee.
Samsung is already trying to repair an image tarnished by the Note 7 recall crisis and faces stiff competition from Apple and Chinese rivals.
The scandal centers on President Park Geun-hye’s secret confidante Choi Soon-sil.
Choi is accused of using her ties with the president to coerce top local firms into “donating” nearly US$70 million to dubious non-profit foundations which Choi then used as her personal ATMs, in exchange for political favors.
Samsung is the single biggest contributor to the foundations and separately paid Choi millions of euros, allegedly to bankroll her daughter’s equestrian training in Germany.
Lee, 48, who was questioned in a marathon 22-hour session last week, is accused of bribery and embezzlement for approving decisions to pay Choi 43 billion won (US$36.4 million), and of perjury at a parliamentary hearing, the prosecution spokesman said.
Prosecutors are probing whether Samsung’s payments were aimed at securing government approval for a 2015 merger of two of its units.
The merger of Cheil Industries and Samsung C&T was seen as a key step toward ensuring a smooth third-generation power transfer to Lee.
It was opposed by many investors who said it wilfully undervalued Samsung C&T’s shares. But it was backed by the National Pension Service, a major Samsung shareholder.
Ex-welfare minister Moon Hyung-pyo was charged yesterday with abuse of power for allegedly pressuring the fund’s managers to approve the deal.
Park was impeached by parliament last month, and the constitutional court is deciding whether to uphold the decision.
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