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South Korean prosecutors arrested Samsung’s billionaire heir Jay Y. Lee — aka Lee Jae-yong — on accusations of bribery and other charges, in a case linked to a wide-scale political scandal that led to the impeachment of South Korean President Park Geun-hye.
The vice chairman of Samsung Electronics is accused of donating about $38 million to a controversial presidential adviser, among other charges. Prosecutors say the bribe helped the world’s largest smartphone maker to receive government favors for a merger between two Samsung affiliates. They alleged the move was to ease the leadership transition of Lee at Samsung, who is acting as de facto head of the electronics giant in place of his ill father.
The South Korean government has traditionally been lenient toward its powerful, family-controlled chaebol conglomerates. The top 10 chaebols generate annual revenue exceeding 80 percent of the country’s gross domestic product. The arrest is a first for Samsung, the largest business group whose electronics arm alone accounts for one-fifth of the Asian country’s exports.
Prosecutors sought an arrest warrant last month for Lee, which was rejected by a Seoul court. Last week, however, the 48-year-old vice chairman of Samsung Electronics was questioned for a second time, and the court stated that “it is necessary to arrest [Lee] in light of a newly added criminal charge and new evidence.”
The arrest does not reflect a court opinion on guilt or innocence, but rather demonstrates the seriousness of the potential crime and/or that it assumes a flight risk. It also allows prosecutors to investigate further and to file formal charges within the coming days.
Samsung has admitted to making donations but denies they were for bribes.
During a December parliamentary hearing, Samsung claimed it was pressured to give money to two foundations run by Choi Soon-sil, President Park’s confidant who is at the center of the influence-peddling scandal that led to Park’s impeachment. It is among 52 local corporations that donated millions of dollars to the organizations.
Lee’s father, Lee Kun-hee, has been convicted of bribery, tax evasion and breach of trust, but was never arrested and his prison terms were suspended. The senior Lee’s criminal record was later erased in presidential pardons. Lee Kun-hee has been hospitalized since suffering a heart attack in 2014, leaving his son to stand in as chairman.
Critics of chaebol power have cheered the arrest of Lee. Fighting corruption has been a hot issue in South Korea in recent years. In 2014, almost two-thirds of people surveyed by the Anti-Corruption and Civil Rights Commission of the country said they thought Korean society was corrupt, and the country passed a landmark anti-corruption bill last year. Observers believe this latest development involving Samsung could further corner the disgraced president, who is awaiting a final decision from the Constitution Court.
Others, however, are wary about the economic impact of Lee’s arrest.
The Korea Employers Federation, a pro-business lobby, said it was “shocked and deeply worried” about the arrest. “Samsung is the global company that represents South Korea, and we fear that the vacuum in its management will weigh heavily on the economy by increasing uncertainty and hurt international credibility,” said the federation in a statement.
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