With Samsung chief's arrest, three executives in spotlight

Feb 17, 2017, 00:32
With Samsung chief's arrest, three executives in spotlight

Samsung Group, South Korea's biggest business conglomerate, is on high alert on Friday as the group's de facto leader, Lee Jae-yong, has been formally detained over his alleged role in a widening corruption scandal that led to the impeachment of President Park Geun-hye.

The scandal centres on Choi Soon-sil, who is accused of using her close ties with Park to force local firms to "donate" almost $70m to non-profit foundations which Choi allegedly used for personal gain.

The move reverses a decision from last month where the Seoul Central District Court in South Korea rejected a request for an arrest warrant for Lee, Samsung's 48-year-old vice chairman.

Lee avoided arrest last month when the court dismissed prosecutors' request, citing the lack of evidence.

He was already being held at a detention centre after appearing in court Thursday as judges deliberated whether to issue an arrest warrant.

Park has been stripped of her powers while the Constitutional Court decides whether to uphold her impeachment.

The prosecution is also bringing an additional charge of perjury against Lee.

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"We will do our best for the truth to be revealed in court", it said. But underneath the consumer goods a scandal has been brewing, and it has now engulfed the company's vice chairman and heir apparent, Jay Y. Lee.

The case involves whether or not millions of dollars in payments from Samsung to businesses and foundations run by an associate of the President's - Choi Soon-sil - constituted a bribe, and if Lee had any personal dealings with the contributions. They also are investigating Lee on allegations of embezzlement of Samsung funds, hiding assets overseas and lying under oath during a parliamentary hearing.

The court is also considering whether to issue an arrest warrant for Park Sang-jin, a president at Samsung Electronics and head of the Korea Equestrian Federation, who oversaw the company's external relations, including Samsung's contacts with Choi's company in Germany. In 2008, Lee's father, Lee Kun-hee, and three other senior Samsung executives were indicted on charges of financial wrongdoing.

Lee's arrest will likely shock the business community.

Samsung said in a statement on Wednesday it had "not paid bribes nor made improper requests to the president seeking favours".

The merger in 2015 of Samsung C&T and Cheil Industries was opposed by many investors who said it wilfully undervalued the former unit's shares. Its offices have been raided several times on suspicion that the presidential office influenced the decision by South Korea's state-run pension fund to back Samsung's merger plan previous year.

The merger was personally reportedly beneficial to Lee, as it eventually led him to take over control of Samsung from his father.