Samsung Chief Jay Y. Lee Arrested Amidst Corruption Scandal in South Korea

A court in South Korea has approved the arrest of Samsung Group’s Lee Jae-yong, the heir apparent to the world’s largest smartphone maker, on allegations of bribery, perjury, and embezzlement, reports Bloomberg.

The special prosecutor’s office accuses Lee of bribing a close friend of the president to gain government favours related to leadership succession at the conglomerate. In the ongoing investigation, prosecutors accuse Samsung of paying bribes of nearly $38 million to organizations linked to the president and an associate to secure government backing of a controversial merger.

Lee and the Samsung Group deny any wrongdoing. Investigators have since collected more details, this time presenting the judge with enough evidence for the court to find sufficient legal grounds to make an arrest. Prosecutors say Lee funded Park’s associate-Choi Soon-sil-to help him restructure Samsung, and transition into his expected role as leader of the company.

Prosecutors accused Mr Lee of giving donations worth 41bn won ($36m;£29m) to organisations linked to Ms Park’s close friend Ms Choi.

Lee has effectively taken the helm of Samsung – South Korea’s biggest business group – since his father suffered a heart attack in 2014.

Lee Kun-hee, group chief and Samsung Electronics chairman, saw his stock value drop by 116 billion won to 14.53 trillion won.

Professor Cho Chang-hoon from Sogang University Business School said it sends a message: “With the owner of the company being arrested, it will mean not only financial losses for Samsung, but also social costs as well”.

Lee’s arrest comes as Samsung attempts to move past the controversy of last year’s Galaxy Note 7 rollout which saw some devices catch on fire and the entire product range scrapped. Samsung has admitted to making payments, but insists it did nothing wrong, saying the payments were not in exchange for political favors of any kind.

Incidentally, Park herself is also being investigated and facing impeachment over corruption charges. Arriving in a police van, Lee went inside without answering reporters’ questions.

Less than a month after their initial request was denied, South Korean prosecutors have been issued a warrant to arrest Samsung Electronics Ltd. vice chair Lee Jae-yong.

He is also suspected to have given bribes to Choi’s daughter to develop her equestrian career. She remains in office but has no power.