Samsung chief Lee arrested in corruption investigation

[LA se Karachi]

Samsung heir arrested in corruption probe

SEOUL: The heir of South Korean giant Samsung was arrested on Friday as part of a probe into corruption and influence-peddling that caused President Park Geun Hye to be impeached.

"It is acknowledged that it is necessary to arrest (Lee Jae Yong) in light of a newly added criminal charge and new evidence," a court spokesman said in a statement.

Lee, Samsung Electronics' vice-chairman, is accused of paying nearly US$40 million in bribes to Park's secret confidante to secure policy favours.

He was already being held at a detention centre after appearing in court on Thursday as judges deliberated whether to issue an arrest warrant.

Lee, the son of the Samsung group boss Lee Kun Hee, has been quizzed several times over his alleged role in the scandal that has rocked the nation.

The 48-year-old, described as a key suspect in the scandal, narrowly avoided being formally arrested last month, after the court ruled there was insufficient evidence.

But prosecutors on Tuesday made a second bid for his arrest, saying they had collected more evidence in recent weeks.

His arrest, the first for a Samsung chief, is likely to send shock waves through the group, which is a major part of the South Korean economy and includes the world's largest smartphone maker, Samsung Electronics.

It is already reeling from the debacle over the recall of its flagship Galaxy Note 7 device and reports have suggested it could face sanctions from overseas authorities if Lee is punished.

The scandal centres on Choi Soon Sil, who is accused of using her close ties with Park to force local firms to "donate" nearly US$70 million to non-profit foundations which Choi allegedly used for personal gain.

Samsung was the single biggest donor to the foundations. It is also accused of separately giving millions of euros to Choi to bankroll her daughter's equestrian training in Germany.

The court is also deliberating an arrest warrant for another Samsung executive, who is also the head of Korea Equestrian Federation, over bribery charges.

Samsung said in a statement Wednesday it had "not paid bribes nor made improper requests to the president seeking favours".

Lee has effectively taken the helm of Samsung - South Korea's biggest business group - since his father suffered a heart attack in 2014.

Prosecutors are probing whether Samsung had paid Choi to secure state approval for the controversial merger of two Samsung units seen as a key step towards ensuring a smooth power transfer to Lee.

The merger in 2015 of Samsung C&T and Cheil Industries was opposed by many investors who said it wilfully undervalued the former unit's shares.

But the deal went through after Seoul's state pension fund - a major Samsung shareholder - approved it.

Samsung is South Korea's largest business group and its revenue is equivalent to about a fifth of the country's GDP.

- AFP/de

http://www.channelnewsasia.com/news/business/samsung-heir-arrested-in-corruption-probe/3526180.html

 

[艹艹艹]

http://in.reuters.com/article/us-southkorea-politics-samsung-group-idINKBN15V2RD
TECHNOLOGY PHOTOS | Fri Feb 17, 2017 | 6:16am IST
Samsung chief Lee arrested in corruption investigation

By Hyunjoo Jin | SEOUL

Samsung Group chief Jay Y. Lee was arrested early on Friday over his alleged role in a corruption scandal that led parliament to impeach South Korean President Park Geun-hye, dealing a fresh blow to the world's biggest maker of smartphones.

The 48-year-old Lee, vice chairman of Samsung Electronics Co Ltd (005930.KS), was taken into custody at the Seoul Detention Centre, where he had awaited the court's decision following a day-long, closed-door hearing that ended on Thursday evening.

The judge's decision was announced at about 5:30 a.m. (2030 GMT) on Friday, more than 10 hours after Lee, the sprawling conglomerate's third-generation leader, had left the court.

Shares in Samsung Electronics opened down 1.2 percent, while shares in Samsung C&T Corp (028260.KS), the de facto holding company of Samsung Group, opened down 3.2 percent compared with the wider market's .KS11 drop of 0.45 percent.

A spokeswoman for Samsung Group [SARG.UL] said no decision had been made about whether Lee's arrest would be contested or whether bail would be sought.

The same court rejected a request from prosecutors last month to arrest Lee. On Tuesday, the special prosecutor's office had requested a warrant to arrest him and another executive, Samsung Electronics president Park Sang-jin, on bribery and other charges.

The court rejected the request to arrest Park, who also heads the Korea Equestrian Federation, saying it was not needed given his "position, the boundary of his authority and his actual role".

The prosecution said it had secured additional evidence and brought more charges against Lee in the latest warrant request.

"We acknowledge the cause and necessity of the arrest," a judge said in his ruling, citing the extra charges and evidence.

Samsung and Lee have denied wrongdoing in the case.

"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.

While Lee's detention is not expected to hamper day-to-day operation of Samsung Group companies, which are run by professional managers, experts have said it could affect strategic decision-making by South Korea's biggest conglomerate.

"There are more than 100,000 of us (in Samsung Electronics). It wouldn't make sense for a company of that size to not function properly just because the owner is away. It's business as usual for us," said an engineer at Samsung Electronics, who declined to be identified.

RESTRUCTURING

Samsung Group, a key driver of Asia's fourth-largest economy, has been engaged in a restructuring process as it clears a succession path for Lee to assume control after his father, Lee Kun-hee, was incapacitated by a heart attack in 2014.

"It is not like Samsung's business will be grinding to a halt. There are many smart people at the company," former Samsung Electronics executive Kim Yong-serk said recently.

However, Lee's arrest would have an impact on longer-term investment decisions, said Kim, now a professor at Sungkyunkwan University.

"Samsung presidents are evaluated on an annual basis, so they cannot make bold bets about the future. They need a chairman when making long-term investment decisions," he said.

Samsung is also the world's biggest maker of memory chips and flat screen TVs.

Lee's arrest gives a boost to prosecutors who have zeroed-in on Samsung Group to build their case against President Park and her close friend Choi Soon-sil, who is in detention and faces charges of abuse of power and attempted fraud.

Both Park and Choi have denied wrongdoing.

Prosecutors have focused their investigations on Samsung's relationship with Park, 65, who was impeached by parliament in December and has been stripped of her powers while the Constitutional Court decides whether to uphold her impeachment.

They accused Samsung of paying bribes totaling 43 billion won ($37.74 million) to organizations linked to Choi to secure the government's backing for a merger of two Samsung units.

That funding includes Samsung's sponsorship of the equestrian career of Choi's daughter, who is in detention in Denmark, having been on a South Korean wanted list.

If parliament's impeachment is upheld by the Constitutional Court, Park will become South Korea's first democratically elected leader to be forced from office early.

Park remains in office but stripped of her powers while she awaits the Constitutional Court's decision.

"This is a painful event for Vice Chairman Lee," said Kim Sang-jo, a shareholder activist and economics professor at Hansung University who was questioned by the special prosecutor as a witness in the probe.

"But this will be an important opportunity for Samsung Group to sever ties with the past," he said, referring to links between the government and the country's conglomerates, also known as chaebol.

 

[AndrewJin]

I don't get it.
Why did he have to pay bribery to ensure favorable policy?
Korean government should have voluntarily set good policies for its biggest corporation.

 

[Jlaw]

I don't get it.
Why did he have to pay bribery to ensure favorable policy?
Korean government should have voluntarily set good policies for its biggest corporation.

No difference than special lobbyists bribing party members in western democrazies.

 

[terranMarine]

No difference than special lobbyists bribing party members in western democrazies.

The only difference is the usage of terminology, whereas corruption has a very negative intonation and often used by Western Media addressing Non Western countries. The West itself invented the word lobby to camouflage the exact human nature so it would not sound so illegal. Anyway South Korea recently has made plenty of headlines, quite impressive for such a small country.

 

[AndrewJin]

The only difference is the usage of terminology, whereas corruption has a very negative intonation and often used by Western Media addressing Non Western countries. The West itself invented the word lobby to camouflage the exact human nature so it would not sound so illegal. Anyway South Korea recently has made plenty of headlines, quite impressive for such a small country.

Legal corruption to the West is just like air to human beings.

 

[TaiShang]

Legal corruption to the West is just like air to human beings.

Each new election cycle is designed for system perpetuation by forcing citizens to forget about past misconduct/corruption by de-electing the corrupt politician.

De-election is considered a form of punishment.

But, four-five years in the office actually sets up all the revolving door structure for a politician, so, leaving the office is in fact not a punishment for the person, but a new stage in professional career. Nonetheless, the public is not concentrated on the new show and the old is just old.

The cycle continues as sytemized and legalized corruption generates interests and maintain elite/class control over politics and power. As long as there is money and benefits (even welfare checks count) for the mass public to have a decent lifestyle (albeit in debt), system is perpetuated. Crisis occurs if the cake is too small and all gobbled up by the elite.

The risk is that, in times of a crisis, emotional public may elect neo-fascists as they thrive on factionalism and hatred.