The arrest of Samsung Group chief Jay Y. Lee has sent shock waves through South Korea.
He is the highest-profile business figure caught up in the corruption scandal swirling around President Park Geun-hye.
Lee is accused of bribing a close friend of the president to gain government favours and faces charges of bribery, embezzlement, hiding assets overseas and perjury.
Sends a message
Professor Cho Chang-hoon from Sogang University Business School said it sends a message: “With the owner of the company being arrested, it will mean not only financial losses for Samsung, but also social costs as well. However, with this South Korea is showing that it will not accept wrongdoing. So, in the long term, there’s a chance that South Korea’s credibility will be raised.”
Shares in Samsung Electronics slipped but ended the trading session down only 0.4 percent on Friday.
There are concerns that Lee’s arrest could create a leadership vacuum and hamper Samsung’s ongoing restructuring plans.
Fitch Ratings says Jay Y. Lee's arrest has “no immediate impact on the credit rating of Samsung Electronics.”— Saheli Roy Choudhury (@sahelirc) February 17, 2017
Among ordinary South Koreans there were mixed reactions. Seoul resident Lee Hyun-sook said the court should have ordered his arrest when the prosecutors tried before. She added: “There was enough evidence this time round and the law is fair. Well done to the special prosecutors team!”
But Seo Jong-seok called the arrest a shame and worried about the economic impact. He said: “The original focus of the special prosecutor was the president, but I think because they couldn’t find much on her during the investigation, they have arrested Lee. I think this will have a huge effect on our country’s economy.”
The Samsung group is South Korea’s biggest conglomerate, or chaebol. It accounts for about 20 percent of the country’s economy, employing around half a million people.
Lee is the de facto boss since his father – who was himself twice convicted of financial crimes – was incapacitated by a heart attack two years ago.
Lee is a suspect in the influence-peddling scandal that led parliament to impeach 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 Lee have denied wrongdoing in the case.
No decision had been made on whether Lee’s arrest would be contested or whether bail would be sought, a spokeswoman 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 Lee’s arrest.