Samsung Chief Arrested on Bribery Charges in Corruption Scandal

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Samsung Chief Arrested on Bribery Charges in Corruption Scandal

Samsung chief Jay Y Lee has been arrested over his alleged role in an influence-peddling scandal that reaches to the highest levels of the South Korean government, it was reported on Friday.

Reuters said the 48-year-old vice-chairman and heir-apparent of Samsung was taken into custody at the Seoul Detention Center on Friday morning, after waiting there overnight for the decision.

Image via Reuters
South Korea’s special prosecutor’s office accuses Lee of bribing a close friend of President Park Geun-hye – who is currently facing impeachment over the scandal – in order to win favors related to leadership succession at Samsung Group. Lee now faces charges including bribery, embezzlement, hiding assets overseas, and perjury. Both Geun-hye and Lee have denied wrongdoing in the case.

Prosecutors have up to 10 days to indict Lee, but they can seek an extension. After indictment, a court must then make its first ruling within three months. Currently there’s no word on whether lawyers representing Lee will contest the arrest or seek bail.

Shares in Samsung ended Friday down 0.42 percent, in line with a flat wider market. Ratings agencies say they don’t expect any impact on the company’s credit ratings, claiming Lee’s arrest will accelerate improvements in corporate transparency and governance.

Meanwhile, Lee’s arrest is not expected to hamper day-to-day operations at Samsung’s divisions, which are run by professional managers. That said, the conglomerate is currently going through a restructuring to clear a succession path for Lee to assume control after his father suffered a heart attack in 2014, suggesting strategic decision-making on the issue could be affected.

Lee’s detention comes as Samsung tries to resuscitate its Galaxy brand following last year’s Note7 debacle, in which the handsets were prone to setting on fire whilst charging. The company is hoping that its Galaxy S8, expected to launch in April, will bring the brand back on course in a crucial year when Apple is expected to announce a “tenth anniversary” iPhone 8, for which Samsung will also provide 160 million OLED display panels.

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