Samsung Woes Mount after Recalls, with Boss Facing Arrest

Jay Lee has been implicated in an alleged corruption scandal that led parliament to impeach President Park Geun-hye. “While there does seem to be a tendency in South Korean society to go easy on corporate corruption, there is a serious danger of greater disaster to come for large South Korean businesses in the global market if they neglect their response to the anti-corruption issue the way they’re doing now”, said Transparency International Korea.

If Lee’s arrest is approved, prosecutors can detain him for up to 21 days before formally charging him, said the court’s spokesman Shin Jae-hwan. In South Korea, Samsung is more than just an electronics manufacturer – it’s the country’s largest employer alongside LG.

According to BBC News, Jay Y. Lee himself was brought in for questioning for more than 20 hours last week.

Park, who remains in office but stripped of her powers while the court decides her fate, has denied wrongdoing.

A report from Reuters claims Lee will be held by the court until a district judge reaches a decision on whether he should be prosecuted for the allegations.

The payments were allegedly made to help win government approval of a 2015 merger between Samsung holding company Cheil Industries and construction firm Samsung C&T Corp., a move that solidified Lee’s control over Samsung. Samsung Electronics, the group’s crown jewel, is the world’s biggest maker of smartphones and computer memory chips.

Prosecutors understood worries that Lee’s arrest could hurt the economy, but “we believed that it was even more important to carry out justice”, Lee, the spokesman at the special prosecutors’ team, told reporters. The case against her is pending in South Korea’s Constitutional Court.

Since Lee Jae-yong’s father suffered a heart attack in May 2014, the company has been trying to accelerate a leadership succession from the 72-year-old father to his son.

The Samsung probe is part of a broader investigation into contributions that dozens of Korean companies gave to Choi Soon-sil, the Park confidante.

The 2015 merger expanded Lee’s control of Samsung Electronics to around 4% of company shares.

Minority shareholders of Samsung C&T, including the US hedge fund Elliott Management, opposed the merger, saying it benefited the Lee family at their expense. The statement also mentioned that the possibility of destruction of evidence is low because the prosecution already secured enough evidence following the three raids on Samsung offices.

Samsung has acknowledged providing funds to the institutions but has repeatedly denied accusations of lobbying to push through the merger.

Choi admitted visiting the presidential Blue House several times to help Park handle “personal matters” and had shared an e-mail account with a senior presidential aide to edit some of Park’s speeches.