Samsung chief questioned by prosecutors in South Korea
political scandal
Special South Korean prosecutors questioned the head of top
conglomerate Samsung Group [SAGR.UL] on suspicion of bribery on Thursday in an
influence-peddling scandal that led to President Park Geun-hye's impeachment.Park remains in office but has been stripped of
her powers while the Constitutional Court decides whether to uphold the
December impeachment and make her the first democratically elected leader to be
forced from office.Park has denied wrongdoing."I am very sorry to the South Korean people for not
showing a better side," Samsung Group leader Jay Y. Lee told reporters as
he arrived at the prosecution office in a black sedan, greeted by protesters
holding signs calling for his arrest and accusing him of being the president's
accomplice.Investigators would now decide whether to seek an arrest
warrant against Lee, 48, special prosecution spokesman Lee Kyu-chul told
reporters.Parliament impeached Park over allegations she allowed a
friend, Choi Soon-sil, to exert inappropriate influence over state affairs.Choi is accused of colluding with Park to pressure big
businesses, including the Samsung Group, 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, has denied wrongdoing.Prosecutors named Lee a suspect on Wednesday and are
investigating whether Samsung gave 30 billion won ($25.28 million) to a
business and foundations backed by Choi in exchange for the national pension
fund's support for a 2015 merger of Samsung C&T Corp and Cheil Industries
Inc.Lee in December denied accusations the conglomerate sought to
curry favor with Park or Choi to secure the 2015 merger, a deal seen as
critical for ensuring family control of the conglomerate as generational
succession looms.Wearing a dark suit, white shirt and dark red tie, Lee bowed
after making brief remarks to reporters. A Samsung Group spokeswoman declined
to comment on the investigation.Proving improper dealings between Park, or Choi, and Samsung
would be key for the prosecutors' case, analysts said, noting their goal was to
prove Park or her surrogates took bribes from corporations in exchange for
favors.The special prosecution spokesman said investigators were
also looking into whether Lee lied during a December parliamentary hearing
about Samsung's involvement in the scandal, as well as whether he could be
charged with breach of trust or embezzlement.Investigators questioned two senior Samsung Group executives
this week as witnesses.The special prosecution has not begun investigations into
any other conglomerates. Dozens of South Korean corporate groups made
contributions to the two foundations, but Samsung's donations were the largest.
"NATIONAL
INTEREST"
The scandal has triggered weekly rallies calling for Park to
step down. She has apologized and said this month the pension fund's support
for the Samsung companies' merger was in the national interest.If Park were to leave office, a presidential election would
be held within 60 days. Among the expected contenders is former U.N.
Secretary-General Ban Ki-moon.Lee took over as leader of the smartphones-to-pharmaceuticals
conglomerate after his father, founding family patriarch Lee Kun-hee, had a
heart attack in 2014.Jay Y. Lee's arrest or indictment would be a blow to Samsung and
the family, which has been streamlining its business to ensure a stable
transfer of control from the ailing Lee Kun-hee to his children.While analysts and investors said management would be able to
keep the various affiliates including Samsung Electronics Co Ltd in good shape,
the conglomerate as a whole may be slower to commit to major investments or
acquisitions should Jay Y. Lee be imprisoned.Some also said Samsung and the Lee family may lose
credibility among investors."A corruption scandal is the most embarrassing thing for
a pension fund like us," said Park Yoo-kyung, a Hong Kong-based director
for Dutch pension fund APG Asset Management, which holds shares in Samsung
Electronics."We have an obligation to invest in a clean
company."Share prices of most Samsung companies have shown muted
reaction to Lee's implication in the scandal, however. Samsung Electronics
shares rose 1.4 percent to a record high 1.94 million won on Thursday and
Samsung C&T shares gained 1.6 percent, compared with a 0.6 percent rise for
the broader market."It's possible that Samsung Group companies will try to
behave more transparently in response and operate in a more fair manner that
shareholders can rationally understand," said IBK Asset Management fund
manager Kim Hyun-su.(Reporting by Se Young Lee and Ju-min Park;
Additional reporting by Joyce Lee and Hyunjoo Jin; Editing by Tony Munroe and
Nick Macfie)
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