This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/technology/2017/feb/17/choi-gate-samsung-heir-lee-jae-yong-formally-arrested-for-corruption

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Choi-gate: Samsung heir Lee Jae-yong formally arrested for corruption Samsung head arrested over South Korean Choi-gate corruption scandal
(about 13 hours later)
The Samsung heir, Lee Jae-yong, has been formally arrested as part of a probe into the “Choi-gate” corruption and influence-peddling scandal that led to the impeachment of Park Geun-Hye as South Korea’s president. The acting head of Samsung, South Korea’s biggest conglomerate, has been arrested in connection with the corruption and influence-peddling scandal that threatens to topple the country’s impeached president, Park Geun-hye.
“It is acknowledged that it is necessary to arrest [Lee] in light of a newly added criminal charge and new evidence,” a court spokesman said. Special prosecutors investigating a scandal that has rocked South Korea’s political and business worlds accuse Lee Jae-yong of bribing a close friend of Park to secure government support for a business deal that would propel him to the top of the Samsung group.
Lee – officially vice-chairman of Samsung Electronics but in effect the head of the whole conglomerate – is accused of paying nearly $40m in bribes to Park’s secret confidante to secure policy favours. They reportedly plan to indict him on charges including bribery, embezzlement, hiding assets overseas and perjury, after the Seoul central court approved the billionaire’s arrest.
He was already being held at a detention centre after appearing in court on Thursday as judges deliberated whether to issue an arrest warrant. Lee, also known as Jay Y Lee, is officially vice-president of the Samsung group, but has been the firm’s de facto head since his father, Lee Kun-hee, had a heart attack in 2014.
Lee, the son of the Samsung group boss Lee Kun-hee, has been quizzed several times over his alleged role in the scandal that has rocked the nation. The 48-year-old spent Thursday night at the Seoul detention centre awaiting the court’s decision on Friday morning.
The 48-year-old, described as a key suspect, narrowly avoided being formally arrested in January after the court ruled there was insufficient evidence. While prosecutors decide whether to indict Lee, he will be forced to swap his $4m (£3.2m) mansion in Seoul for a 6.65 sq m cell equipped with a mattress, TV and a toilet. He is being held in a single cell and will not be allowed any contact with other prisoners, according to a detention centre official.
But prosecutors on Tuesday made a second bid for his arrest, saying they had collected more evidence in recent weeks. Prosecutors have up to 10 days to indict Lee, Samsung’s third-generation leader, although they can seek an extension. After indictment, a court would be required to make its first ruling within three months.
His arrest is likely to send shockwaves through the group, which is a major part of the South Korean economy and includes the world’s largest smartphone maker, Samsung Electronics. Samsung said it had yet to decide whether to contest Lee’s arrest or seek bail. “We will do our best to ensure that the truth is revealed in future court proceedings,” the company said in a statement.
It is already reeling from the debacle over the recall of its flagship Galaxy Note 7 device and reports have suggested it could face sanctions from overseas authorities if Lee is punished. According to South Korean media, Samsung claimed that Park had pressured it into donating to foundations belonging to Choi Soon-sil, the president’s longtime confidante who faces charges of attempted fraud and abuse of power. But the firm insisted it had not expected any special favours in return.
Lee’s father and grandfather repeatedly had close brushes with the law but were never jailed. Lee, whose net worth is estimated at $5.8bn, is the highest-profile figure to have been arrested so far in the Park scandal, which centres on her relationship with Choi.
The scandal centres on Choi Soon-sil, who is accused of using her close ties with Park to force local firms to “donate” nearly $70m to non-profit foundations that Choi allegedly used for personal gain. Park, the daughter of a former South Korean dictator who became the country’s first female president in late 2011, has denied any wrongdoing.
Samsung was the single biggest donor to the foundations. It is also accused of separately giving millions of euros to Choi to bankroll her daughter’s equestrian training in Germany. But she conceded she had been “careless” in her relationship with Choi, who reportedly wielded undue influence on economic policy and South Korea’s relations with North Korea.
The court turned down prosecutors’ demand for a separate arrest warrant for another Samsung executive, who is also the head of the Korea Equestrian Federation, citing his limited role in the scandal. Prosecutors were last month forced to rebuild their case against Lee after the same court rejected a request to arrest him.
But on Friday, a court spokesman said: “It is acknowledged that it is necessary to arrest (Lee) in light of a newly added criminal charge and new evidence.”
Lee’s arrest is expected to add momentum to the prosecutors’ case against Park and Choi, who is in detention facing charges of abuse of power and attempted fraud. Choi has denied any wrongdoing.
Samsung is accused of paying bribes totalling 43bn won (£30m) to two foundations operated by Choi. The firm – the single biggest donor to the foundations – is also accused of separately giving millions of euros to Choi to fund her daughter’s equestrian training in Germany.
In return, Lee allegedly sought government approval for the controversial $8bn merger of two Samsung affiliates in 2015 – a move that would smooth his path to the top of the entire Samsung group.
Samsung said in a statement on Wednesday it had “not paid bribes nor made improper requests to the president seeking favours”.Samsung said in a statement on Wednesday it had “not paid bribes nor made improper requests to the president seeking favours”.
Lee has effectively taken the helm of Samsung – South Korea’s biggest business group – since his father had a heart attack in 2014. Park, who was impeached in December after weeks of mass protests, risks becoming the first president since South Korea became a democracy in the late 1980s to be forced from office.
Prosecutors are examining whether Samsung paid Choi to secure state approval for the controversial merger of two Samsung units seen as a key step towards ensuring a smooth power transfer to Lee. She is now president in name only, her powers having been transferred to the prime minister and now acting president, Hwang Kyo-ahn.
The merger in 2015 of Samsung C&T and Cheil Industries was opposed by many investors who said it wilfully undervalued the former unit’s shares. South Korea’s constitutional court is expected to rule on the legality of the impeachment vote by June, although some observers expect a decision to come earlier.
But the deal went through after Seoul’s state pension fund – a major Samsung shareholder – approved it. If Park’s impeachment is upheld, South Koreans would then have to elect a new president within 60 days, and Park would lose her immunity to criminal indictment.
Samsung is South Korea’s largest business group and its revenue is equivalent to about a fifth of the country’s GDP. The current frontrunner to replace Park is Moon Jae-in, a veteran member of the liberal opposition Democratic party who was defeated by Park in the 2011 presidential election.
Lee’s arrest was seen as a blow to Park who is staging an uphill battle at the constitutional court to overturn her impeachment by parliament. Kim Kyoung-soo, a spokesman for Moon, said of Lee’s arrest: “We hope it marks a beginning to end our society’s evil practice of cosy ties between government and corporations and move towards a fair country.”
The court on Thursday said it would wrap up hearings on the impeachment case on Friday next week, sparking expectations of a verdict around 10 March.
If the court confirms Park’s impeachment, the next presidential election would have to take place within 60 days.
Otherwise Park would be able to see her five-year term out in February next year.