Samsung heir arrested on bribery allegations

Samsung Electronics Ltd. vice chair Lee Jae-yong has been arrested and accused of perjury and embezzlement, in a dramatic turnaround less than a month after initial efforts to lay charges were denied.

According to Bloomberg the warrant to arrest the de facto head of Samsung, known professionally as Jay Y. Lee, was issued early Friday morning. A court spokesperson said the decision was made in light of risks that Lee might destroy evidence or flee. Between procedural steps and likely appeals, it might take up to 18 months for a trial and verdict, the spokesperson said.

Lee had already been waiting for the court’s decision at a Seoul detention center, Bloomberg reporters Kanga Kong and Jungah Lee wrote, and will now remain there as a result of the arrest warrant.

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

A warrant has been issued for Samsung vice chair Jay Y. Lee after all.

Lee had been under investigation regarding alleged corruption charges involving impeached South Korean president Park Geun-hye.

The son of company chair Lee Kun-hee, the younger Lee has officially served as Samsung’s vice chair and its de facto head since his father suffered a heart attack in 2014. He was accused by an independent investigation team for participating in payments that Samsung made to Choi Soon-sil, the presidential friend and advisor at the heart of Park’s impeachment scandal, in exchange for government support of a company merger that, according to the Korea Times, was designed for Lee to increase his stake in Samsung as a whole.

According to the Korea JoonAng Daily, Samsung pledged 22 billion won (approximately $24.39 million Canadian) to support the equestrian training of Choi’s daughter. It also contributed 1.6 billion won (approximately $1.77 million) to a winter sports training program established by Choi’s niece, and 20.4 billion won to a pair of Choi-affiliated nonprofit foundations.

The investigation team alleged that in return for the funds, the South Korean president’s office facilitated last year’s merger of Samsung C&T (Samsung’s parent company, which oversees international sales operations) and Samsung affiliate Cheil Industries by ordering the country’s National Pension Service, which held shares in both companies, to vote for the deal, according to the Korea Times. As noted by JoonAng Daily, the National Pension Service also happened to be the largest shareholder of Samsung C&T – and the deal was criticized as unfair for Samsung C&T.

According to Bloomberg, however, South Korean courts ultimately decided the investigation team lacked the evidence necessary to arrest Lee, though he was called in again on Monday for 15 hours of questioning as investigators sought additional information. During this second attempt, a spokesperson for the prosecutor’s office said they found evidence of Lee concealing profits gained through criminal acts and overseas assets.

“Last time, we’ve found that his bribery was mainly associated with the merger,” Bloomberg quoted the spokesperson as saying. “But it’s been additionally discovered that it wasn’t only related to the merger but also to his succession.”

During last month’s investigation Samsung denied providing Choi and her associates with financial aid in return for favours, while Lee himself denied all charges, none of which have been proven in court.

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Jim Love, Chief Content Officer, IT World Canada
Eric Emin Wood
Eric Emin Wood
Former editor of ITBusiness.ca turned consultant with public relations firm Porter Novelli. When not writing for the tech industry enjoys photography, movies, travelling, the Oxford comma, and will talk your ear off about animation if you give him an opening.

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