Samsung heir arrested in corruption probe in South Korea | business-news | Hindustan Times
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Samsung heir arrested in corruption probe in South Korea

business Updated: Feb 17, 2017 12:45 IST
PTI
Samsung

Lee Jae-Yong, vice chairman of Samsung Electronics, arrives to be questioned as a suspect in a corruption scandal that led to the impeachment of President Park Geun-Hye, at the office of the independent counsel in Seoul on February 13, 2017. (Reuters)

Prosecutors today arrested the de facto head of South Korea’s largest conglomerate, Samsung, on bribery and other charges related to a political corruption scandal that triggered the impeachment of President Park Geun-Hye.

In a fresh blow to the electronics giant’s corporate image, a district court cited new evidence in approving the arrest warrant against vice-chairman Lee Jae-Yong, who oversees the family-run electronics giant in the absence of his ailing father.

Among other allegations, Lee is accused of paying nearly USD 40 million in bribes to a confidante of President Park’s to secure policy favours.

“It is acknowledged that it is necessary to arrest (Lee Jae-Yong) in light of a newly added criminal charge and new evidence,” a court spokesman said in a statement.

Samsung offered a measured response following the arrest as the company’s shares took a hit, dipping by around 1.5% in morning trade.

“We will do our best to ensure that the truth is revealed in future court proceedings,” the company said in a statement.

Lee was already being held at a detention centre after appearing in court yesterday as judges deliberated whether to issue an arrest warrant. He will remain in custody as he awaits a trial likely to begin within a few months.

Lee, the son of the Samsung group boss Lee Kun-Hee, has been quizzed several times over his alleged role in the scandal that has rocked the nation.

The 48-year-old, described as a key suspect in the scandal, narrowly avoided being formally arrested last month, after the court ruled there was insufficient evidence.

But prosecutors on Tuesday made a second bid, saying they had collected more evidence in recent weeks. His arrest, the first for a Samsung chief, will send shock waves through the group, which is a major part of the South Korean economy and includes the world’s largest smartphone maker, Samsung Electronics.

“This is a blow to Samsung’s image as a global player in the short term”, HMC Investment Securities’ analyst Greg Roh told AFP.

IBK Investment Securities’ Lee Seung-Woo said that given the cloud over Lee, at a time when the firm is attempting a complicated restructuring, Samsung could refrain from pursuing long-term investments such as overseas mergers and acquisitions.

The company is already reeling from the debacle over the recall of its flagship Galaxy Note 7 device and reports have suggested it could face sanctions from overseas authorities if Lee is punished.

Lee’s father and grandfather repeatedly had close brushes with the law but were never jailed.