Samsung Electronics vice chairman, Jay Y. Lee, has been arrested by South Korean authorities for allegedly being involved in a bribery scandal. Lee stands accused of making donations to the impeached President Park Geun-hye’s friend in exchange for government support and personal gain.
The Seoul Central District Court had originally turned down the request for an arrest warrant on Lee last month. However, it would appear that the situation has changed as the warrant was granted for fear that Lee would destroy evidence or flee the country.
Lee’s involvement with the presidential scandal involves a merger between Cheil Industries Inc. and Samsung C&T Corp. Shareholders of both companies had originally protested against the merger, as they believed that the purchase price of the shares was too low. It was also believed that the merger was only done to cement the power of the of Lee’s family over the Samsung Group at the expense of minority shareholders.
One of the shareholders that voted in favour of the merger happened to be the National Pension Service, which is a government controlled body funded by the public. The NPS was a majority shareholder in Samsung C&T, but surrendered that position to Lee after the merger. At the moment, Samsung C&T is the largest shareholder in Samsung Electronics.
These actions caused Korean authorities to investigate the role of all parties involved in the deal. Samsung Group, for its part, claims that it has never provided funds to anyone in return for political favours. On the other hand, the investigation discovered that Lee had bought a horse worth one billion Won (about RM4 million) for Choi Soon-sil’s (President Park’s confidant at the centre of the scandal) daughter.
The arrest is unlikely to affect Samsung as a company in the short run. Lee was not very involved in the day-to-day business of Samsung Electronics, and the courts declined to issue a warrant for the company’s current President Park Sang-Jin.
[Source: Bloomberg]
