Samsung vice chairman Jay Y Lee was arrested Friday morning for his alleged participation in an influence-peddling scandal that reportedly reaches to the highest levels of the South Korean government.
The special prosecutor’s office accuses Lee of bribing a close friend of President Park Geun-hye to gain government favors related to leadership succession at the conglomerate. It said on Friday it will indict him on charges including bribery, embezzlement, hiding assets overseas and perjury.
Lee, a member of the richest family in South Korea, and heir-apparent at Samsung was taken into custody at the Seoul Detention Center, after an overnight wait for a decision on the arrest. Both President Geun-hye and Lee have denied wrongdoing in the case.
While prosecutors have up to 10 days to indict Lee, they can request an extension, if needed. At that point, a court will be required to make an initial ruling within 3 months. Lee’s lawyers have not indicated whether they will contest the arrest or seek bail.
Samsung shares ended Friday down 0.42%, in an overall flat market. The company’s credit ratings or its day-to-day operations are not expected to be affected by the arrest. Ratings agencies say Lee’s arrest is actually a blessing of sorts, as it should accelerate improvements in the corporate transparency and governance in the country.
Samsung is currently restructuring in order to make a way clear for Lee to assume control of the firm, following his father’s 2014 heart attack. The arrest could affect strategic decision making on that issue.
