Choi-gate: Samsung heir Lee Jae-yong formally arrested for corruption

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The Samsung heir, Lee Jae-yong, has been formally arrested as part of a probe into the “Choi-gate” corruption and influence-peddling scandal that led to the impeachment of Park Geun-Hye as South Korea’s president.

“It is acknowledged that it is necessary to arrest [Lee] in light of a newly added criminal charge and new evidence,” a court spokesman said.

Lee – officially vice-chairman of Samsung Electronics but in effect the head of the whole conglomerate – is accused of paying nearly $40m in bribes to Park’s secret confidante to secure policy favours.

He was already being held at a detention centre after appearing in court on Thursday as judges deliberated whether to issue an arrest warrant.

Lee, the son of the Samsung group boss Lee Kun-hee, has been quizzed several times over his alleged role in the scandal that has rocked the nation.

The 48-year-old, described as a key suspect, narrowly avoided being formally arrested in January after the court ruled there was insufficient evidence.

But prosecutors on Tuesday made a second bid for his arrest, saying they had collected more evidence in recent weeks.

His arrest is likely to send shockwaves through the group, which is a major part of the South Korean economy and includes the world’s largest smartphone maker, Samsung Electronics.

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.

Lee’s father and grandfather repeatedly had close brushes with the law but were never jailed.

The scandal centres on Choi Soon-sil, who is accused of using her close ties with Park to force local firms to “donate” nearly $70m to non-profit foundations that Choi allegedly used for personal gain.

Samsung was the single biggest donor to the foundations. It is also accused of separately giving millions of euros to Choi to bankroll her daughter’s equestrian training in Germany.

The court turned down prosecutors’ demand for a separate arrest warrant for another Samsung executive, who is also the head of the Korea Equestrian Federation, citing his limited role in the scandal.

Samsung said in a statement on Wednesday it had “not paid bribes nor made improper requests to the president seeking favours”.

Lee has effectively taken the helm of Samsung – South Korea’s biggest business group – since his father had a heart attack in 2014.

Prosecutors are examining whether Samsung paid Choi to secure state approval for the controversial merger of two Samsung units seen as a key step towards ensuring a smooth power transfer to Lee.

The merger in 2015 of Samsung C&T and Cheil Industries was opposed by many investors who said it wilfully undervalued the former unit’s shares.

But the deal went through after Seoul’s state pension fund – a major Samsung shareholder – approved it.

Samsung is South Korea’s largest business group and its revenue is equivalent to about a fifth of the country’s GDP.

Lee’s arrest was seen as a blow to Park who is staging an uphill battle at the constitutional court to overturn her impeachment by parliament.

The court on Thursday said it would wrap up hearings on the impeachment case on Friday next week, sparking expectations of a verdict around 10 March.

If the court confirms Park’s impeachment, the next presidential election would have to take place within 60 days.

Otherwise Park would be able to see her five-year term out in February next year.

Guardian