Head of Samsung faces arrest in presidential corruption scandal

Ron Amadeo
Neilson Barnard / Getty Images
Lee Jae-yong, the vice chairman of Samsung Group and acting head of the company, could soon be facing formal corruption charges. South Korean prosecutors are currently seeking the arrest of the Samsung heir, accusing him of bribery, embezzlement, and perjury. The warrant must first be approved by a court, which will convene Wednesday.
The accusation sucks Samsung into the ongoing corruption scandal that has rocked South Korea, where impeachment hearings for President Park Geun-hye have already started. Lee is accused of paying bribes to a nonprofit connected to the South Korean president in exchange for approval of a merger of two Samsung Group affiliates—Cheil Industries and Samsung C&T—in 2015. Once merged, the two companies became one of the largest investors in Samsung Electronics, solidifying the Lee family's control over the crown jewel of the Samsung empire. The prosecutor's office estimated that the total size of the alleged bribes was ₩43 billion ($36 million).
The possible arrest of Lee comes at a time when Samsung is still sorting through the Note 7 recall debacle, and it could interrupt Lee Jae-yong's massive ongoing reorganization of Samsung Group.
Samsung executives are no strangers to legal trouble. Lee Kun-hee, Lee Jae-yong's father and the chairman of Samsung Group, was convicted of bribery in 1996 and of tax evasion and breach of trust in 2009. In both cases he was never arrested or served jail time, and his criminal record was later erased through presidential pardons.
Lee Kun-hee resigned from Samsung in 2008 after a slush-fund scandal but returned to the company in 2010. A 2014 heart attack sidelined Kun-hee and allowed his son to become acting head of Samsung Group, but Kun-hee is expected to hold on to the title of "Chairman" until his death.
Last week Lee was the subject of a 22-hour-long interrogation at the prosecutor’s office, and the heads of LG and Hyundai have been questioned as well. Samsung represents around 23 percent of South Korea's GDP, and while a spokesman for the special prosecutor’s office said they considered what effect the arrest could have on South Korea's economy, “it is more important to seek justice.”
Head of Samsung faces arrest in presidential corruption scandal Reviewed by Bizpodia on 23:41 Rating: 5

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