Asia

Samsung heir Lee Jae-yong arrested in South Korea

  • 17 February 2017
  • From the section Asia
Lee Jae-yong Image copyright EPA

Samsung's heir apparent Lee Jae-yong has been placed under arrest in South Korea, accused of bribery and other charges.

The case is linked to a scandal that led to the impeachment of President Park Geun-hye.

Samsung is accused of giving donations to non-profit foundations operated by Choi Soon-sil, a friend of Ms Park, in exchange for government favours.

Mr Lee and the Samsung Group deny any wrongdoing.

The acting Samsung chief was first questioned by prosecutors in January, but they decided then not to arrest him.

But he was questioned for a second time earlier this week.

On Friday, the court said it "acknowledged that it is necessary to arrest [Lee Jae-Yong] in light of a newly added criminal charge and new evidence."

The prosecution will now investigate further, and has 20 days to file formal charges. The arrest does not reflect a court opinion on guilt or innocence but only means it considers the potential crime very serious or that it assumes a flight risk.

What's the accusation?

Prosecutors accused Mr Lee of giving donations worth 41bn won ($36m;£29m) to organisations linked to Ms Park's close friend Ms Choi. They alleged this was done to win government support for a big restructuring of Samsung that would help a smooth leadership transition in favour of Mr Lee, who is standing in as chairman for his ill father, Lee Kun-hee.

The controversial merger required support from the national pension fund - the allegation is that this support was granted in return for the donations.

In a December parliamentary hearing, Samsung admitted giving a total of 20.4bn won to two foundations, but denied seeking favours in return.

Mr Lee also confirmed the firm gave a horse and money to help the equestrian career of Ms Choi's daughter, Chung Yoo-ra, something he said he now regrets.

What's the political scandal?

This centres around President Park's ties to Ms Choi and has brought allegations of cult activities, influence-peddling and leaks of classified information.

Image copyright EPA
Image caption There have been protests against President Park Geung-hye, who has been impeached

Ms Choi is a long term family friend whose father had already had close ties with President Park's father who was president in the 1970s.

As well as soliciting donations, Ms Choi is accused of using their friendship to interfere in politics.

Image copyright AP
Image caption Ms Choi has denied that she did wrong but has apologised for 'causing trouble'

She is now on trial charged with various offences, including abuse of authority, coercion and attempted fraud, and denies wrongdoing.

Parliament voted in December to impeach President Park. Her case is now being heard by the constitutional court. Meanwhile she has been stripped of her presidential powers.

A friendship too far in Seoul?

What does it mean for Samsung?

Mr Lee is currently vice-chairman of Samsung Electronics. But since his father, Lee Kun-hee, suffered a heart attack in 2014, he is considered de facto boss of the entire Samsung Group conglomerate.

Regardless of the outcome, a trial is a big blow to the company. His arrest may not affect short term production or the running of the firm but there could be long term implications.

Shares in the conglomerate's firms lost between 0.5% and 2% on Friday.

Lee Jae-yong

Samsung's heir apparent

  • - Grandson of Samsung founder Lee Byung-chul, son of current chairman Lee Kun-hee.

  • - Also known as Jay Y Lee, the 48-year-old has spent his entire career in the company.

  • - Is vice chairman of Samsung Electronics and was nominated to join the firm's board in October 2016.

  • - Despite his arrest, still widely expected to take overall control of Samsung.

  • - Critics say his rise through Samsung has been due to his birth, not his business experience.

Getty Images

Samsung is one of the biggest electronics companies in the world and for the head of a company that thrives on a premium brand image to be involved in a corruption scandal is a huge embarrassment.

It says it will do its best "to ensure that the truth is revealed in future court proceedings", though denies wrongdoing.

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