Arrest Warrant Sought For Samsung Heir In S. Korean Presidential Bribery Scandal

Jan 16, 2017
Originally published on January 16, 2017 7:48 am

Prosecutors in South Korea have requested an arrest warrant for the de facto head of the nation's biggest conglomerate, Samsung, on charges of bribery and embezzlement in connection with a swirling scandal that led to the president's impeachment.

Investigators say Jay Y. Lee, the vice chairman of Samsung Electronics and the scion of the one of the largest companies in the world, helped improperly direct company money to the confidant of President Park Geun-hye in order to curry favor with the government.

That confidant is now at the center of a criminal investigation and ongoing political scandal, and the president is awaiting a trial by a constitutional court on whether a resounding impeachment vote in parliament will result in her official removal.

Prosecutors allege that Lee directed funds to Park's friend, Choi Soon-sil, and in return won support from the administration for a controversial merger between two company affiliates.

On Thursday, Lee appeared at the prosecutor's office for questioning which lasted until Friday morning. Before the interrogation began, he said to a throng of cameras, "I am deeply sorry, and I apologize to the Korean people for failing to put our best face forward due to this incident."

In a statement, however, the company denied the accusations:

"It is hard to understand the special prosecutors' decision. Samsung has never given support or wanted reward in turn. In particular, Samsung cannot accept the special prosecutors' claims that there was an illegal solicitation regarding the merger or the management succession. We believe the court will make a good judgment."

Already, lawmakers who supported the ouster of the president have spoken out in support of the charges. The culture of conglomerates, or chaebol, having outsized influence in politics and society has been one of the grievances of protesters who have been demonstrating against the president for months.

"This is a decision that values law and principle," the Democratic Party of Korea's spokesman Gi Dong-min said. "Arresting Lee will save Samsung and the national economy. This is the beginning of a real and extensive chaebol reform. It's a great opportunity to break apart the ugly relationship between politics and business."

Haeryun Kang contributed to this post.

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Dramatic developments this morning in South Korea for one of the world's biggest companies. Prosecutors have asked a court to issue an arrest warrant for the leader of Samsung. It's all in connection to this ongoing corruption scandal that led to record-sized protests and the recent impeachment of South Korea's president. NPR's Seoul correspondent Elise Hu has been covering this for us, and she joins us now on the line. Good morning, Elise.

ELISE HU, BYLINE: Good morning.

MARTIN: How is Samsung involved in all of this?

HU: Well, investigators say the head of Samsung, Jay Y. Lee, tried to curry favor with the president with payoffs. Specifically, Lee's accused of directing some $36 million U.S. in company money to two nonprofit foundations that were started by President Park Geun-hye's close friend. This was, prosecutors allege, in order to win government support of a controversial merger between two Samsung affiliates, which happened in 2015. This merger was approved, and it was actually thanks in part to support from the government's pension fund, which is a substantial shareholder. To put this into context, Rachel, if the arrest warrant does lead to an indictment, Samsung becomes the latest to take a criminal hit in South Korea's largest political scandal, really, ever.

MARTIN: OK, so what is Samsung saying about all this?

HU: This comes at a rocky time for the conglomerate. Samsung is set to release the findings on its fire-prone Galaxy Note 7 phone sometime in the next month or so. But on these specific charges, Samsung Korea says it is innocent. A spokesperson told NPR it's hard to understand the prosecutor's decision and that it won't accept the claims that there was any illegal solicitation going on regarding that 2015 merger.

MARTIN: In South Korea, just give us a sense of how big of a deal it is to charge an executive at this level from a company of this size.

HU: Good question. South Korea actually has a history of charging executives at its family-controlled conglomerates like Samsung. These companies are known in Korean as chaebol. Lee's father, the ailing Samsung chairman Lee Kun-hee, has actually been convicted twice before, once on bribery charges, another on tax evasion. But he never did jail time, and he avoided it partly because of the coziness between Korean government and business. Lee's prison terms were suspended, and his criminal records were actually erased by presidential pardons.

MARTIN: All right. So all this is connected to this presidential-level scandal. Remind us where we're at with that. Lawmakers impeached President Park in December for abusing power. But she's not been removed from office, so where are things at?

HU: Her powers have been suspended. We have an acting president that's running South Korea right now. And that's all while this impeachment trial continues, and an independent criminal investigation of the president is ongoing.

MARTIN: NPR's Elise Hu speaking to us about Samsung and the political intrigue from Seoul, South Korea. Thanks, Elise.

HU: You bet. Transcript provided by NPR, Copyright NPR.