Seoul court considers arrest of Samsung de facto head

Associated Press

Wednesday, Jan. 18, 2017 | 12:46 a.m.

SEOUL, South Korea — A South Korean court is considering whether to approve the arrest of Samsung Electronics vice chairman Lee Jae-yong, one of the country's wealthiest business leaders, on charges of bribery and other offenses.

Lee, the only son of Samsung's chairman, did not speak to a crowd of reporters waiting while arriving and leaving the Seoul Central District Court on Wednesday. After the four-hour hearing he was taken to a detention center near Seoul to await the court's decision.

If Lee's arrest is approved, prosecutors can detain him for up to 21 days before formally charging him, said the court's spokesman Shin Jae-hwan. The judge will announce a decision on the arrest warrant early Thursday morning, Shin said, though the exact timing was unclear.

Samsung is South Korea's biggest family-controlled conglomerate, or chaebol, with businesses encompassing consumer electronics, shipbuilding and life insurance. Samsung Electronics, the group's crown jewel, is the world's biggest maker of smartphones and computer memory chips. Samsung Electronics and its affiliated companies account for about a third of the market value in South Korea's main stock market.

The company had no comment on the hearing Wednesday.

Samsung Electronics had a challenging year even before getting drawn into an influence-peddling scandal that led to the impeachment of President Park Geun-hye. In 2016, Samsung Electronics had several product recalls, including the discontinuation of Galaxy Note 7 smartphones that tended to overheat or catch fire.

Prosecutors requested Lee's arrest for allegedly bribing Park and a confidante of hers, Choi Soon-sil, who is on trial for meddling in state affairs.

Lee, 48, faces allegations of giving bribes worth 43 billion won ($36 million) to Choi and the president in hopes of winning government backing for a contentious Samsung merger in 2015.

Prosecutors also suspect Lee of embezzling Samsung's corporate funds and of lying under oath during a parliamentary hearing last month.

Lee has been serving as the de facto head of Samsung since his father suffered a heart attack in 2014.

Educated in South Korea, Japan and the United States, he is the crown prince of the country's richest family, one South Koreans often liken to royalty.

Before the scandal Lee had kept a low profile compared to some other third-generation members of the founding families of chaebol. In one of the most notorious cases, an heiress of the Korean Air founders' family threw a tantrum over nuts served to her on one of the carrier's flights, forcing its return to an airport.

Before he was interrogated by lawmakers last month on national TV during the scandal investigation, Lee's first formal public speech was in 2015, when he apologized for a Samsung hospital's role in the spread of a contagious disease.

The public reaction to Lee's implication in the scandal is divided.

Some business groups and newspapers have urged caution out of concern that arresting Lee could hurt the economy due to Samsung's huge role in South Korean industry.

Some civic groups have urged the court to arrest Lee to show that all are equal before the law. Many are angered over the allegations that the national pension fund was pressured to support the Lee family's succession plan.

Lee joined Samsung Electronics' board in October, shortly after the Galaxy Note 7 recalls. Analysts say the company's day-to-day smartphone, semiconductor and TV businesses are unlikely to suffer if he's arrested because other executives run those businesses. But major investments or strategic planning could be put on hold.

Prosecutors also plan to summon Park to question her about the bribery allegations. She is awaiting a court's decision on whether to uphold her impeachment.

A former health minister, Moon Hyung-pyo, was indicted on Monday for pressuring pension fund officials to support the Samsung merger. Prosecutors say they believe Moon, who now heads the pension fund, acted on behalf of Park, who ordered him to ensure the Samsung merger went smoothly.

The merger helped Lee increase his control over Samsung Electronics, South Korea's most valuable company.