Samsung chief arrested for alleged graft

A placard outside the Samsung office features a cartoon in the likeness of Mr Lee Jae Yong. Many Koreans fear that Samsung's troubles would hurt the national economy.
A placard outside the Samsung office features a cartoon in the likeness of Mr Lee Jae Yong. Many Koreans fear that Samsung's troubles would hurt the national economy.PHOTO: BLOOMBERG

Korean prosecutors accuse him of bribing close friend of President for govt favours

SEOUL • The de facto leader of Samsung, Mr Lee Jae Yong, has been arrested on bribery charges, a dramatic turn in South Korea's decades-old struggle to end collusive ties between the government and powerful family-controlled conglomerates.

The special prosecutor's office accuses Mr Lee of bribing a close friend of President Park Geun Hye to gain government favours related to leadership succession at the conglomerate. It said yesterday that it will indict him on charges including bribery, embezzlement, hiding assets overseas and perjury.

Analysts say his case is a test of whether the country's relatively youthful democracy and judicial system are ready to crack down on the white-collar crimes of family- owned conglomerates, or chaebol, among which Samsung is the biggest and most profitable.

The 48-year-old Mr Lee, scion of the country's richest family, was taken into custody at the Seoul Detention Centre early yesterday after waiting there overnight for the decision.

Mr Lee is a suspect in an influence-peddling scandal that led Parliament to impeach Ms Park in December, a decision that, if upheld by the Constitutional Court, would make her the country's first democratically elected leader forced from office.

Samsung and Mr Lee have denied wrongdoing in the case.

No decision had been made on whether Mr Lee's arrest would be contested or whether bail would be sought, a spokesman for Samsung Group said.

"We will do our best to ensure that the truth is revealed in future court proceedings," the Samsung Group said in a brief statement after Mr Lee's arrest.

The court had rejected a request last month to arrest Mr Lee, but prosecutors this week brought additional accusations against him.

Pro-business groups warned that Mr Lee's arrest would create a "management vacuum" at Samsung, leaving it leaderless and shy of investment.

Many Koreans also fear that Samsung's troubles would hurt the national economy. The conglomerate's main company, Samsung Electronics, alone accounts for 20 per cent of the country's exports.

Prosecutors have focused on Samsung's relationship with Ms Park, 65, accusing the tech giant of paying bribes totalling 43 billion won (S$98 million) to organisations linked to her friend Choi Soon Sil to secure government backing for the controversial 2015 merger of two Samsung units.

Prosecutors have up to 10 days to indict Mr Lee, Samsung's third-generation leader, although they can seek an extension. After indictment, a court would be required to make its first ruling within three months.

Prosecutors plan to question Mr Lee again today .

NYTIMES, REUTERS

A version of this article appeared in the print edition of The Straits Times on February 18, 2017, with the headline 'Samsung chief arrested for alleged graft'. Print Edition | Subscribe