Samsung Heir Arrested on Bribery Allegations, South Korean Court Ruled
A South Korean Court on Friday approved the arrest of Samsung Heir Lee Jae-Yong in Seoul over allegations on bribery and other charges linked to a massive corruption scandal. The decision marks the country's improving judicial system that in the past had been lenient toward business elites for its white-collar crimes.
The Seoul Central District Court decided to arrest the Samsung heir after it found additional evidence enough to take him into custody. Lee was waiting for the decision at a detention center near Seoul and then sent to solitary confinement. Prosecutors can detain him up to 20 days before formally indicting him. Samsung said it will continue to defend itself in court and ensure the truth is revealed, as per Time.
Prosecutors accused the Samsung heir of bribery worth $36 million to President Park Geun-Hye and her close friend Choi Soon-Sil in exchange for the government backing for a smooth company leadership transition. They are also investigating Lee on allegations of misappropriating Samsung funds, hiding assets overseas and lying under oath during a hearing. The court decision will also help them bring bribery charges against President Park Geun-Hye whose powers were suspended and is awaiting judgment regarding her presidency.
"The special prosecutor definitely has plans to push ahead with the indictment," a spokesman said. Bloomberg mentioned prosecutors found evidence that Lee's bribery wasn't only related to the merger but also to his succession. Samsung donated nearly $70 million to two nonprofit foundations controlled by Choi and transferred millions of euros to Choi's company in Germany that helped finance the needs of her daughter and niece.
The Samsung heir admitted to the transferred funds but denied any favors. This prompted prosecutors to seek a perjury case against Lee as it suspected Samsung won government support for a merger between its two groups in 2015 that was a key step in the leadership transition from father to son. The merger was opposed by minority shareholders that said the deal would affect them while it benefits Lee and Samsung's founding family.
Samsung eventually got the shareholders' approval with the support of the National Pension Fund, its key investor. Accordingly, the head of the pension was indicted last month for the said action. The prosecutors are also considering the value of Samsung Biologics and whether it was overpriced to benefit the Samsung heir and its family.
The shares of the company fell less than 1 percent in Seoul after the arrest of the Samsung heir. Prior to that, the stock climbed 5.5 percent this year following a 43 percent rally in 2016. A fund manager noted there won't be much impact on the stock as companies had few problems running its businesses after chaebol heads were arrested.