South Korea prosecutors expand charges against Samsung boss

Posted February 17, 2017

South Korea's special prosecutor's office said on Wednesday it had expanded charges against Samsung Group chief Jay Y. Lee to include hiding the proceeds of a criminal act before it chose to seek a warrant for his arrest.

The head of South Korea's largest business conglomerate is facing his second arrest warrant in the bribery case that lead to the impeachment of South Korean President Park Geun-hye in 2016.

During last month's investigation Samsung denied providing Choi and her associates with financial aid in return for favours, while Lee himself denied all charges, none of which have been proven in court.

Lee's father, Samsung group patriarch Lee Kun-hee, was incapacitated by a 2014 heart attack.

Lee was also accused of embezzlement, perjury and allowing the group to buy two pricey horses for the daughter of Choi.

When the merger of Cheil Industries Inc. and Samsung C&T Corp. was originally proposed, shareholders including activist investor Paul Elliott Singer fought against it, arguing the purchase price was too low and would cement the founding family's control at the expense of minority shareholders.

Park has been stripped of her powers while the Constitutional Court decides whether to uphold her impeachment.

"We have enough evidence to establish President Park and Choi Soon-sil as co-conspirators sharing profits, said Lee Kyu-chul, a spokesman of the special prosecutor".

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"I believe the court will make a wise decision", he said.

With the scandal engulfing the group for months, Samsung has not conducted its annual personnel reshuffle and failed to lay out its business targets for this year.

Lee has now become the first Samsung Group chief to be behind bars.

Lee's arrest is likely to put greater public focus on three key executives at the sprawling conglomerate.

However, the group's reorganization plans, including a possible shift of Samsung Electronics into a holding company structure, are unlikely to take shape before Lee is released, Samsung officials said.

It is already reeling from the debacle over the recall of its flagship Galaxy Note 7 device and reports have suggested it could face sanctions from overseas authorities if Lee is punished.

In seeking Lee's arrest for the second time, the prosecutors said the Samsung heir is being investigated on additional charges.

Samsung has said it made the payments but denied they were made in exchange for political favors. "There is a possibility that Samsung may be excluded from public tenders by global organizations in the future".