Samsung heir Lee Jae-yong arrested in bribery probe

Jay Y Lee

Jay Y Lee

A South Korean court has approved the arrest of a billionaire Samsung heir accused of bribery and other charges in connection with a massive corruption scandal.

The special prosecutor's office has focused on Samsung Group's relationship with Park, accusing Lee in his capacity as the head of South Korea's largest conglomerate of pledging 43 billion won ($37.7 million) to a business and organisations backed by Park's friend, Choi Soon-sil, in exchange for support of a 2015 merger of two Samsung companies.

Samsung officials, who had vowed to "reveal the truth in the court" before the arrest warrant was granted, expressed serious concerns that a leadership vacuum would make the group's key business decisions hit a standstill.

In rejecting the first attempt to arrest Lee last month, the court cited a lack of evidence.

A decision may come late on Thursday or early Friday, based on previous instances.

A Seoul court said on Tuesday it would hold a hearing on the request for arrest warrants at 10:30 a.m. (0130 GMT) on Thursday.

Park is suspended from duty but is still protected by her position pending a final ruling on her impeachment by the Constitutional Court. It is also accused of separately giving millions of euros to Choi to bankroll her daughter's equestrian training in Germany. The prosecutors also brought up accusations on Lee of hiding assets overseas and concealing profit gained from criminal acts.

Lee, vice chairman of Samsung Electronics and son of the Samsung group head Lee Kun-hee, is accused of paying almost $40m in bribes to Park's secret confidante to secure policy favours.

Previously CEO of Samsung Electronics, Choi created the role of chief operating officer in 2010, and appointed Jay Y. Lee to that post.

During the court's deliberation, Lee was said to have denied the allegations of bribery and embezzlement.

Industry observers said Samsung may be affected by US anti-corruption laws after Lee was arrested on charges of bribery.

When the merger of Cheil Industries Inc. and Samsung C&T Corp. was originally proposed, shareholders including activist investor Paul Elliott Singer fought against it, arguing the purchase price was too low and would cement the founding family's control at the expense of minority shareholders.

They are also seeking the arrest of the president of Samsung Electronics Co Ltd, Park Sang-jin, who also heads the Korea Equestrian Federation and attended Thursday's hearing with Lee.

Earlier this month, prosecutors searched the offices of the antitrust agency, the Korea Fair Trade Commission, and financial regulator, the Financial Services Commission, as part of their investigation of Samsung Group.

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