17 February 2017
Samsung Group chief Jay Y. Lee was arrested early today over his alleged role in a corruption scandal at highest level which resulted in the impeachment of the sitting president. He is accused of paying some US$40 million in bribes to President Park’s secret confidante, Choi Soon Sil, to secure policy favours. He was taken into custody at the Seoul Detention Centre after waiting there overnight for the judges to decide whether to issue an arrest warrant.
Last month he escaped arrest as the judge ruled that there was not enough evidence. Over the past two weeks the prosecution has collected evidence that incriminates him.
The court however turned down a request for arrest of another Samsung executive on grounds of his limited role in the scandal.
Samsung had paid Choi to secure state approval for the controversial merger of two Samsung units. The shares in these two units were help by the national pension fund. The pension fund earned an unrecognised loss in the merger. The merger was essential for Lee to take control of the group. The family owns only a small part of the share capital of the company but maintains its control through a maze of cross holding in various units which are run by separate companies.
Samsung is in a restructuring process to clear a succession path for Lee to assume control after his father was incapacitated by a heart attack in 2014.
This arrest was the first for a Samsung chief. Even though Samsung was involved in corruption scandals previously, the government stopped short of arresting the owners for fear of economic repercussions.
Choi Soon Sil is held in custody for exploiting her close ties with the President and collecting $79 million from big corporations in South Korea.

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