South Korean prosecutors on Monday sought a warrant for the arrest of the Samsung Group’s de facto leader — one of the nation’s wealthiest and most-powerful executives — in a bribery case related to last month’s impeachment of the country’s president.

Investigators allege that Lee Jae-yong, vice chairman of Samsung Electronics Co., improperly directed company funds to a confidant of the impeached president, Park Geun-hye — perhaps in an effort to solidify his dynastic control over the tech giant, which is South Korea’s largest company.

The prosecutors say that Lee, the grandson of the late Samsung founder, directed the funds to Park’s friend, Choi Soon-sil, to curry favor with the government. In return, the prosecutors allege, he wanted support for a controversial 2015 merger between two company affiliates.

Rhee So-eui, a company representative, said Samsung did not make contributions to receive favors.

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“In particular, we find it hard to accept the special prosecutor’s argument that Samsung has made improper requests related to the merger of Samsung affiliates or the leadership transition,” Rhee said. “We believe the court will make the appropriate judgment on this matter.”

If the arrest warrant is issued and leads to an indictment, these would be the latest criminal charges in an unprecedented power-abuse scandal that has rocked South Korea’s political system, leading to historic street protests in recent months.

Protesters hold cutouts of impeached President Park Geun-hye, top, as they march toward the presidential house during a candlelight vigil in Seoul on Jan. 7, 2017. (Ahn Young-joon / AP )

“This thing is metastasizing all out of control,” Robert Kelly, an associate professor at Pusan National University, said of the scandal. “Every day there’s some new revelation.”

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South Korea’s national legislature last month voted to impeach Park, who is suspended from daily presidential duties and, for now, remains immune to criminal charges. A constitutional court is weighing whether to permanently remove Park, whose appointed prime minister is the acting head of state.

Park has apologized repeatedly for the scandal but denied acting outside the national interest. She has also refused to cooperate with the various investigations into her actions.

South Korea has a long history of charging executives at its massive, family-controlled companies, known as chaebol, which control a sizable portion of the nation’s retail and manufacturing economy.

Yet the allegations against the Samsung chief, who is known as Jay Y. Lee in the West, stand out because of the firm’s local and global prominence — and as a sign that more business moguls tied to the scandal could face criminal scrutiny.

“The accusations against Jay are so common for Korean chaebol heads they’re more like a rite of passage,” said Geoffrey Cain, a Seoul-based journalist currently writing a book about Samsung’s empire. “But this time it’s a lot more significant.”

Cain said the allegations, if they lead to a conviction, could dislodge Lee as the company’s de facto leader. “That would be groundbreaking in South Korea, since it’s almost unheard of for a ruling family to be pushed out of corporate power.”

Kelly, the Pusan National University professor, said South Korea’s government has a history of meddling in economic matters, creating an environment that invites corruption. “It’s always putting businessmen and government bureaucrats around a table talking about money,” he said.

Still, he said the case involving Samsung “carries a lot of weight.”

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“You’ve heard Korea referred to as a Republic of Samsung,” he said. “This is something that, quite honestly, could have good political side effects, which is taking down Korea’s largest chaebol, which has been used to a certain amount of impunity.”

The special counsel in the case has probed whether the tech giant, the nation’s largest conglomerate, donated more than $20 million to firms and foundations associated with Choi, the disgraced presidential confidant.

Choi Soon-sil, center, South Korean President Park Geun-hye's longtime friend, arrives for her trial at the Seoul Central District Court in Seoul on Jan. 11, 2017. (Ahn Young-joon / AP )

Choi, whose late father was an influential cult leader in South Korea, is standing trial on an array of allegations that she used her influence with Park to obtain funds from numerous business, including Samsung. Investigators want to know whether the payments led to the National Pension Service’s decision to back a controversial merger in 2015 between two Samsung affiliates, Samsung C&T Corp., and Cheil Industries Inc.

Prosecutors on Monday charged Moon Hyung-pyo, the chairman of the National Pension Service, with perjury and abuse of authority.

The merger was seen by corporate analysts as an effort to solidify Lee’s dynastic succession over the tech giant’s vast holdings. His title is vice chairman, but he’s essentially running the Samsung Group after his father’s incapacitating heart attack in 2014.

Prosecutors last week called the younger Lee, a tall, bespectacled man who attended Harvard Business School, to discuss the bribery allegations. He reportedly answered questions, off and on, for 22 hours. Some reports suggested Lee, worth an estimated $6 billion, was allowed only a $5 box meal during the grilling.

Lee, with a polite smile and escorted by a lawyer, arrived at the counsel’s office about 9:30 a.m. Thursday, shuffling through a crush of reporters. “I am deeply sorry, and I apologize to the Korean people for failing to put our best face forward due to this incident,” he told reporters before bowing and entering the office. He didn’t leave until the next morning — again amid a mass of media.

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During the questioning, a spokesman for the special counsel said prosecutors had been considering whether to charge Lee with bribery and perjury. Prosecutors had already asked him in mid-December not to leave the country.

Unlike in the United States, many high-profile South Korean investigations involving large companies or political figures play out publicly. Prosecutors leak investigative details, conduct high-profile searches and summon suspects for questioning with dozens of reporters present — public displays that typically foretell criminal charges.

The case against Lee, however, remained a shock — despite the weeks of public hints that charges could be coming.

The company and Lee have said they made payments to Choi’s foundations — even reportedly buying a nearly $1 million dressage horse for her daughter, a noted equestrian athlete. The firm has said the payments were philanthropic and supported national sports programs, denying accusations that it sought to ease the merger.

The Samsung Group is no stranger to criminal crises at the top of its empire.

Lee’s father, chairman Lee Kun-hee, took over Samsung in 1987. He was forced to resign in 2008 amid charges related to a slush fund to promote Samsung’s interests. He was fined nearly $100 million and served a suspended sentence, even though prosecutors recommended that he be sent to prison. The elder Lee regained control of the company in 2010, but has been incapacitated since 2014.

The Samsung Group is just one of several South Korean conglomerates that donated funds to Choi’s foundations, raising the specter that other corporate titans could also be felled by the scandal.

Stiles is a special correspondent.

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9:05 a.m.: This article has been updated with comments from a Samsung representative.

This article was originally published Jan. 15, 2017, at 9 p.m.</s>SEOUL: A South Korean special prosecutor will seek an arrest warrant for Samsung Group leader Jay Y. Lee for charges including bribery over his role in a corruption scandal that could unseat President Park Geun-hye, his office said on Monday.

The prosecutors have been looking into whether Samsung's support for a business and foundations backed by Park's friend, Choi Soon-sil, may have been connected to the National Pension Service's 2015 decision to support a controversial merger of two Samsung Group affiliates.</s>Prosecutors have requested the arrest of Samsung heir Lee Jae-yong as a bribery suspect in the influence-peddling scandal that led to the impeachment of South Korea's president.

The special prosecutors office said it had asked the court to approve a warrant for the arrest of Samsung Electronics vice chairman Mr Lee, 48.

Samsung is South Korea's biggest company, and Mr Lee its de facto head.

The prosecutors office said it also indicted ex-health minister Moon Hyung-pyo on suspicion of abusing his power to compel the national pension fund to support a contentious Samsung merger in 2015.

Last week investigators questioned Mr Lee on claims that Samsung won government favours such as getting backing for the merger in exchange for donating corporate funds to various entities controlled by Choi Soon-sil, a long-time friend of President Park Geun-hye, who has been jailed.

Samsung had no comment when asked about the arrest warrant.</s>Prosecutors 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 on Monday is part of an investigation into a massive political corruption scandal that has shaken South Korea's political and business elites.

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 detention.

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.

Related: Samsung heir is questioned as suspect in corruption probe

Prosecutors accuse Lee and Samsung of providing 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.

During a public grilling last month, Lee said he was unaware of Samsung's payments to the organizations when they were made.

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

Related: South Korea presidential scandal: What you need to know

The National Pension Service declined to comment on Moon's indictment.

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.

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.

This isn't the first time a senior member of the family that controls Samsung has faced criminal charges.

Lee's father, Samsung Group Chairman Lee Kun-hee, was found guilty of tax evasion in 2008 and sentenced to three years in prison, but that sentence was suspended. He was ordered to pay 110 billion won ($93 million) and didn't spend any time behind bars. He was found not guilty of a charge of breach of trust over accusations he illegally attempted to transfer ownership of a Samsung affiliate to his son.

Lee Kun-hee suffered a heart attack in 2014, which accelerated the conglomerate's planning for who will succeed him.

-- Stella Kim and Jethro Mullen contributed to this report.

Correction: An earlier version of this story misstated the status of the arrest warrant for Lee Jae-yong.</s>South Korean prosecutors asked a court Monday for the arrest of the heir to giant conglomerate Samsung for bribery in connection with a political scandal that has seen President Park Geun-Hye impeached. SEOUL: South Korea's special prosecutors' office said it will seek a warrant to arrest the head of Samsung Group, the country's biggest conglomerate, as a corruption scandal engulfing President Park Geun-hye escalated on Monday .

Start the conversation, or Read more at Channelnewsasia.com.</s>South Korea's special prosecutors' office said it will seek a warrant to arrest the head of Samsung Group, the country's biggest conglomerate, accusing him of paying multi-million dollar bribes to a friend of President Park Geun-hye. From a report:</s>SEOUL: South Korea's special prosecutors' office said on Monday it was seeking a warrant to arrest the head of Samsung Group, the country's largest conglomerate, accusing him of paying multi-million dollar bribes to a friend of President Park Geun-hye.

Samsung Group chief Jay Y. Lee was questioned for 22 straight hours last week as investigators probed a corruption scandal that resulted in parliament impeaching Park last month.

The special prosecutors' office accused Lee of paying bribes totalling 43 billion won (US$36.42 million) to Choi Soon-sil, a friend of the president who is at the centre of scandal.

Lee, who became the de facto head of the Samsung Group after his father, Lee Kun-hee, suffered a heart attack in 2014, was also accused of embezzlement and perjury in the prosecution's application for an arrest warrant.

Seoul's central district court said a hearing would be held at 10:30 a.m. (0130 GMT) on Wednesday to decide whether to approve the warrant.

"The special prosecutors' office, in making this decision to seek an arrest warrant, determined that while the country's economic conditions are important, upholding justice takes precedence," Lee Kyu-chul, a spokesman for the office, told a media briefing.

Samsung said it could not accept the accusations that Lee paid bribes.

"It is difficult to understand the special prosecutors' decision," it said in an emailed statement.

Prosecutors have been looking into whether Samsung's support for a business and foundations backed by Park's friend Choi may have been connected to the National Pension Service's 2015 decision to support a controversial US$8 billion merger of two Samsung Group affiliates.

NPS chairman Moon Hyung-pyo was indicted on Monday on charges of abuse of power and giving false testimony.

Park remains in office but has been stripped of her powers while the Constitutional Court decides whether to make her the country's first democratically elected leader to be forced from office.

Moon was arrested in December after acknowledging ordering the world's third-largest pension fund to support the US$8 billion merger in 2015 while he was head of the health ministry, which oversees the NPS.

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

Choi is accused of colluding with Park to pressure big businesses, including Samsung, to contribute to non-profit foundations backing the president's initiatives.

Choi, in detention and on trial on charges of abuse of power and attempted fraud, again denied wrongdoing on Monday in an appearance at the Constitutional Court.

She also denied having any prior knowledge of the Samsung Group's controversial 2015 merger of two affiliates.

"Even if I knew, I could not have passed on any information because I have no knowledge about mergers or hedge funds, anything like that, in the first place," Choi told the court.

South Korea has been gripped by political crisis for months, with Park impeached in December. Park has also denied wrongdoing, though admitted carelessness in her relationship with Choi.

If the impeachment is upheld by the Constitutional Court, an election would be held in two months, with former U.N. Secretary General Ban Ki-moon expected to be a candidate.

Shares in group flagship Samsung Electronics, the world's top maker of smartphones, flatscreen TVs and memory chips, extended losses on Monday afternoon and were down 2.3 percent.</s>SEOUL, South Korea -- Prosecutors have requested the arrest of the Samsung heir Lee Jae-yong as a bribery suspect in the influence-peddling scandal that led to the impeachment of South Korea's president.

The special prosecutors office said Monday that it requested an arrest warrant for Lee, the 48-year-old Samsung Electronics vice chairman.

It said it also indicted ex-health minister Moon Hyung-pyo on charges he abused his power to compel the national pension fund to support a contentious Samsung merger in 2015.

Last week, the investigators questioned Lee on allegations Samsung won government favors such as getting backing for the merger in exchange for donating corporate funds to various entities controlled by Choi Soon-sil, a long-time friend of President Park Geun-hye. She has been jailed.

Lee earlier denied the allegations. Samsung had no comment.</s>Seoul - Prosecutors are seeking a warrant to arrest Samsung Group’s Jay Y. Lee for allegations including bribery and embezzlement, a stunning turn for the scion of South Korea’s richest family groomed for decades to take over the company from his father.



Lee, 48, the de facto head of the Samsung Group and vice chairman of Samsung Electronics Co., is accused of participating in payments that Samsung made to a close friend of South Korean President Park Geun-hye in exchange for government support in the company’s succession planning.

A court will still have to determine whether to approve the warrant, which was announced by prosecutors in a briefing on Monday. A hearing is scheduled for Wednesday.

A special prosecutors’ team was established in December to investigate whether Samsung and other chaebol business groups contributed money to Choi Soon-sil, the Park confidant, in exchange for political favors.

President Park has been already impeached and her powers suspended.

Samsung shares fell as much as 3% following the announcement.

The company didn’t immediately have a comment on the arrest warrant.



“We believe that there was an illegal request made by Samsung in facilitating the process of business succession,” Lee Kyu-chul, a spokesman for the prosecutor’s office, said in the briefing.

The arrest warrant would let prosecutors continue their probe while Lee is detained.

Formal charges and an indictment would follow. 



The total amount of bribes and promises made by Samsung is alleged to be about $36m, Lee said.



The investigation jeopardizes Lee’s ability to take over Samsung Group and risks further destabilizing the leadership of South Korea’s largest company.

His father, Chairman Lee Kun-hee, has been hospitalized since suffering a heart attack in 2014.

Samsung is now facing its second crisis in a matter of months, after it was forced to pull the Note 7 smartphone off the market last year because the device was catching fire.



“If Lee is imprisoned, it will damage Samsung’s reputation as well as South Korea’s economy in general,” said Park Sang-in, Professor of Economics, Graduate School of Public Administration at Seoul National University.

Prosecutors will continue to probe three other Samsung executives, including Samsung Corporate Strategy Office Vice Chairman Choi Gee-sung, President Chang Choong-ki and Samsung Electronics President Park Sang-jin without any arrests.



The presidential scandal has gripped South Korea for months, with millions taking to the streets to demand the ouster of President Park.

READ: Samsung to ‘soon’ reveal cause of exploding Note 7s

Lawmakers questioned the heads of nine chaebol to understand whether they were pressured to give money to foundations controlled by Choi.

Then in recent weeks, investigators have focused on Samsung to determine whether the company made payments to gain the backing of Korea’s national pension fund for a controversial merger between Samsung affiliates in 2015.



Prosecutors have homed in on Samsung’s contributions to entities linked to Choi, including a 1 billion-won horse for her daughter and millions of dollars for riding lessons.

The money allegedly was in exchange for helping ensure a smooth transfer of power at Samsung to the younger Lee.



One key question is whether the administration exerted pressure on Korea’s national pension service to support the controversial merger of two Samsung Group companies, Cheil Industries Inc. and Samsung C&T Corp.

The controversial deal was approved in 2015 and made it easier for Lee to gain influence over the sprawling conglomerate.



The merger of Cheil and C&T was opposed by activist investor Paul Elliott Singer and succeeded by a narrow margin, thanks to the support of the NPS, then the biggest shareholder of C&T.

The special prosecutors have previously arrested Moon Hyung-pyo, former chairman of the pension service.

Moon acknowledged that he pressured NPS officials to support the Samsung merger, special prosecutors said last month.

Earlier on Monday, prosecutors separately indicted Moon for abusing his authority and for perjury.</s>South Korea’s Special Prosecutor’s Office on Monday sought an arrest warrant against Samsung chief Jay Y Lee, who is accused of paying bribes worth millions to President Park Geun-hye’s friend, who is at the centre of an extortion scandal. Jay Lee is also accused of embezzlement and perjury, according to the application for an arrest warrant, Reuters reported.

The vice chairman of Samsung Electronics faces allegations of paying bribes worth 43 billion won (more than Rs 200 crore) to organisations with links to Choi Soon-sil, the president’s long-time friend and confidante. He had allegedly paid bribed to ensure the merger of two company affiliates as well as his control of the family business – he became the de facto head of the Samsung Group after his father was incapacitated by a heart attack in 2014.

Spokesman for the prosecution Lee Kyu-chul said that the office had evidence to prove that both Park Geun-hye and Choi Soon-sil had profited from payments made by the Samsung chief. “The special prosecutors’ office, in making this decision to seek an arrest warrant, determined that while the country’s economic conditions are important, upholding justice takes precedence,” he added.

Samsung – South Korea’s largest conglomerate, generating about 17% of the country’s revenue – has denied the accusations: “It is especially hard to accept the special prosecutor’s assertion that there was improper request for a favour related to the merger or succession of control,” the company said in a statement. Shares of Samsung Electronics ended 2.14% lower after the news broke.

The South Korean Parliament had impeached President Park Geun-Hye on December 9, following accusations of colluding with Choi Soon-sil to extort money in the form of donations from South Korean companies. The money, which was transferred to non-profit foundations controlled by Choi Soon-sil, was allegedly used for personal gains. The president also faces accusations of ordering her aides to leak official state documents to her friend, who has no official position in the South Korean government.

The Constitutional Court of South Korea has six months to decide on whether it will uphold the impeachment motion. Till then, Prime Minister Hwang Kyo-ahn holds the responsibility of running the country. If the court decides to remove Park Geun-Hye from the position, South Korea will have to elect a new president within 60 days of the ruling.
South Korean prosecutors issue an arrest warrant for Lee Jae-yong, a senior executive in the Samsung Group, in relation to the political scandal that has led to the impeachment of Park Geun-hye, the President of South Korea.