South Korean prosecutors seek to arrest Samsung Heir

South Korean prosecutors seek to arrest Samsung Heir

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Prosecutors in South Korea are seeking an arrest warrant for Samsung’s heir apparent over allegations of bribery, perjury and embezzlement.

The move against Samsung Electronics Vice Chairman Lee Jae-yong today is part of an investigation into a massive political corruption scandal that has shaken South Korea’s political and business leaders.

Lee is now set to appear Wednesday before a judge who will decide whether the arrest warrant is valid. If it is, the man tapped to head the country’s biggest conglomerate will be taken into custody.

The case involving Lee centers on a contentious merger of two Samsung affiliates in 2015 that helped him strengthen his control over Samsung Electronics (SSNLF), a key part of his family’s sprawling business empire.

Prosecutors claim that Lee and Samsung provided 43 billion won ($36.3 million) to organizations linked to a confidante of President Park Geun-hye in return for government backing for the merger.

The arrest warrant for Lee came on the same day that National Pension Service chief Moon Hyung-pyo was indicted on charges of perjury and abuse of power. Moon is accused of pressuring the pension fund, a major shareholder in one of the Samsung affiliates, to support the merger when he was minister of health and welfare.

Samsung disputes the allegations against Lee, saying in a statement Monday that it “did not make contributions in order to receive favors.”

The charges are the latest developments in the far-reaching scandal that has driven thousands of South Korean protestors to the streets and prompted lawmakers to vote to impeach Park. Other top South Korean companies are also under investigation.

South Korea Protest
(South Koreans flood city streets in protest)

Samsung Electronics’ stock dropped 2.1% after the news of the arrest warrant. The shares are down around 5.5% since Thursday, when Lee was named as a suspect in the corruption scandal and taken in for questioning.

Samsung’s deepening links to the corruption investigation have further damaged the company’s image after the humiliating fiasco over its fire-prone Galaxy Note 7 smartphone last year. Results of an investigation into what caused the smartphones to catch fire are expected to be announced this month.

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