Samsung’s top boss named as suspect in South Korea bribery scandal

World's biggest smartphone maker admits it gave millions of pounds of gifts, including a £688,000 horse, to the president's close confidant

Jungah Lee,Hooyeon Kim
Wednesday 11 January 2017 12:19
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Samsung Group's heir-apparent Lee Jae-yong (L) answers a question as Lotte Group Chairman Shin Dong-Bin (R) listens during a parliamentary probe into a scandal engulfing President Park Geun-Hye at the National Assembly in Seoul on December 6, 2016
Samsung Group's heir-apparent Lee Jae-yong (L) answers a question as Lotte Group Chairman Shin Dong-Bin (R) listens during a parliamentary probe into a scandal engulfing President Park Geun-Hye at the National Assembly in Seoul on December 6, 2016

The boss of Samsung, Lee Jae-yong, will be questioned as a suspect in a corruption scandal that has already led to the downfall of South Korea’s president.

Samsung admitted in December that it donated 20.4bn won (£16m) to foundations run by Choi-Soon-sil, a close confidant of President Park Geun-hye.

The company also confirmed it had provided a horse and riding lessons worth 1 billion won (£688,000) to the presidential aide’s daughter.

Special prosecutors are currently investigating whether those gifts were made in order to garner political influence.

While Lee, 48, was widely expected to be called in for questioning, the fact that he was identified as a suspect was a surprise. The intensifying focus on Lee may jeopardise his ability to succeed his father at the head of Samsung.

Samsung’s vice chairman took over running the company from his father, Lee Kun-hee, who suffered a heart attack in 2014.

It is alleged that the donations were made to secure for government assistance to push through a controversial merger of two Samsung companies. That deal was widely considered to consolidate the heir-apparent’s power at the company and smooth his transition into the top job.

South Korea has been in the grip of a presidential scandal for months, with millions taking to the streets to demand the ouster of President Park Geun-hye. Politicians voted to impeach the president on 9 December.

Samsung’s offices have been searched as part of the probe and Lee faced questions from parliament and prosecutors last year. Two other top Samsung executives were called in on Monday to answer questions about the company’s role. Today, investigators asked parliament to file a complaint against Lee for perjury during parliamentary testimony, without providing further details.

Shares in the Suwon, South Korea-based company rose to a new high on Wednesday, climbing 2.8 percent to 1,914,000 won at the close in Seoul, following an upbeat earnings announcement last week that highlighted the resilience of the company’s business.

When he testified in December, Lee said he never ordered donations to be made in return for preferential measures and rejected allegations he received wrongful government support to push through the merger. Still, Lee, who has been put under a travel ban, confirmed he held private meetings with Park.

The merger between Samsung's Cheil and C&T was opposed by activist investor Paul Elliott Singer and only succeeded by a narrow margin, thanks to the support of Korea’s National Pension Service. Special prosecutors have arrested Moon Hyung-pyo, the former chairman of the pension service. Moon acknowledged that he pressured NPS officials to support the Samsung merger, special prosecutors said last month.

“Samsung wanted to be seen as a victim, but that’s now impossible because Lee is named as a suspect,” Chung said. “When somebody is summoned as a suspect it means prosecutors have obtained definite evidence.”

Bloomberg

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