Samsung chief arrested in corruption case

Samsung Group chief Jay Y. Lee was arrested and is in custody at the Seoul Detention Centre over his alleged role in a corruption scandal which led South Korea's parliament to impeach President Park Geun-hye.

Photo by: Reuters
Photo by: Reuters

Samsung Group chief, Jay Y. Lee, leaves for the Seoul Central District Court at the office of the independent counsel in Seoul, South Korea, February 16, 2017.

A South Korean court on Friday approved an arrest warrant for Samsung Group chief Jay Y. Lee over his alleged role in a corruption scandal.

The corruption scandal also led South Korea's parliament to impeach President Park Geun-hye.

Lee (48), vice chairman of Samsung Electronics Co Ltd, was taken into custody at the Seoul Detention Centre, where he had waited for the court's decision following a day-long closed-door hearing that ended on Thursday evening.

The decision is a fresh blow to the world's biggest maker of smartphones.

TRT World's Editor-at-Large Craig Copetas explains how damaging it is for the company.

Samsung denies any wrongdoing

The judge's decision was announced at about 5:30 am (2030 GMT) on Friday, more than 10 hours after Lee, the sprawling conglomerate's third-generation leader, had left the court.

The same court rejected a request from prosecutors last month to arrest Lee.

On Tuesday, the special prosecutor's office had requested a warrant to arrest him and another executive, Samsung Electronics' president Park Sang-jin, on bribery and other charges.

However, the court rejected the request to arrest Park, who also heads the Korea Equestrian Federation, saying it was not needed given his "position, the boundary of his authority and his actual role."

The prosecution said it had secured additional evidence and brought more charges against Lee in the latest warrant request.

"We acknowledge the cause and necessity of the arrest," a judge said in his ruling, citing the extra charges and evidence.

Samsung and Lee have denied wrongdoing in the case.

"We will do our best to ensure that the truth is revealed in future court proceedings," the Samsung Group said in a brief statement after Lee's arrest.

While Lee's detention is not expected to hamper day-to-day operation of Samsung Group companies, which are run by professional managers, experts have said it could affect strategic decision-making by the country's biggest conglomerate.

The Samsung Group, a key driver of Asia's fourth-largest economy, has been engaged in a restructuring process as it clears a succession path for Lee to assume control after his father, Lee Kun-hee, was incapacitated by a 2014 heart attack.

"It is not like Samsung's business will be grinding to a halt. There are many smart people at the company," former Samsung Electronics executive Kim Yong-serk said recently.

However, Lee's arrest would have an impact on longer-term investment decisions, said Kim.

"Samsung presidents are evaluated on an annual basis, so they cannot make bold bets about the future. They need a chairman when making long-term investment decisions," he said.

Samsung is also the world's biggest maker of memory chips and flat screen TVs.

TRTWorld and agencies