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Samsung heir to be indicted on bribery charges


South Korea

Samsung heir to be indicted on bribery charges



Prosecutors in South Korea say they have charged Samsung group chief Jay Y. Lee with bribery and embezzlement. The 48-year-old was arrested in connection with a corruption scandal that has reached the highest levels of power in South Korea.

The 48-year-old was arrested in connection with a corruption scandal that has reached the highest levels of power in South Korea.

The group chief was taken into custody on Friday.

Four other executives have also been charged.




What are the charges?



The special prosecutor’s office accuses Lee of bribing a close friend of President Park Guen-hye.

It is claimed he wanted to gain government support relating to restructuring and the leadership succession at the conglomerate.

The prosecution office has accused Lee of bribery, not only in seeking to smooth the merger but in the broader process of his succession.

Lee is a suspect in an influence-peddling scandal that in December led the South Korean parliament to impeach Park.

If that decision is upheld by the Constitutional Court, it would make her the country’s first democratically-elected leader to be forced from office.

If parliament’s impeachment of Park is upheld, an election could be held in two months.

In the meantime, the 65-year-old remains in office but is stripped of her powers.



What has Lee said?



Both he and Samsung have denied any wrongdoing.

A spokesperson for Samsung says no decision has been made on whether Lee’s arrest will be contested or if there is a plan to seek bail.

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



What happens now?



After an indictment, courts are required to make their first ruling within three months.

Prosecutors say they plan to question Lee again on Saturday.



The business



Shares in Samsung Electronics ended down 0.42 percent on Friday.

Ratings agencies say they do not expect any impact on the flagship firm’s credit ratings, saying Lee’s arrest could accelerate improvements in management transparency and corporate governance.



Strategic implications



However, experts think Lee’s arrest could hinder strategic decision-making at the South Korean conglomerate.

Samsung is going through a restructuring to clear the path for Lee to assume control after his father was incapacitated by a heart attack in 2014.

Decisions that could be complicated by his arrest include:


  • A plan to reorganise the group into a holding company structure
  • A plan to abandon its future strategy office, a central decision-making body
  • Staff promotions and changes

Lee’s arrest comes as Samsung tries to move past last year’s disastrous roll-out of its Galaxy Note 7 smartphones, which were prone to fire.

However, major business groups criticised the arrest, concerned about the impact on Samsung and, more broadly, on South Korea.

“A management vacuum at Samsung, a global company representing the Republic of Korea, will increase uncertainty and undermine global confidence, posing a big burder on the already struggling economy,” said the “Korea Employer’s Federation”



President Park and Choi Soon-sil



Lee’s arrest gives a boost to prosecutors who have used Samsung to build their case against President Park and her close friend, Choi Soon-sil.

She is in detention and faces charges of abuse of power and attempted fraud.

Both Park and Choi have denied any wrongdoing.

Prosecutors have focused on Samsugn’s relationship with Park.

They allege the group paid bribes of around 37.74 million US dollars to organisations linked to the 65-year-old.

It is alleged the aim was to secure government backing for the controversial 2015 merger of two Samsung units, a deal seen as key to smoothing Lee’s succession.



What they are saying



“We hope it marks a beginning to end our society’s evil practice of cozy ties between government and corporations and move towards a fair country,” Kim Kyoung-soo, a spokesman for Moon Jae-in, a member of the liberal opposition Democratic Party who is leading opinion polls in the presidential race.