Investigators allege that Lee Jae-yong,\u00a0vice chairman of Samsung Electronics Co., improperly directed company funds to a confidant\u00a0of the impeached president, Park Geun-hye \u2014 perhaps in an effort to solidify his dynastic control over the tech giant, which is South Korea\u2019s largest company.
The prosecutors say that Lee, the grandson of the late Samsung founder, directed the funds to Park\u2019s friend,\u00a0Choi Soon-sil, to curry favor with the government. In return, the prosecutors allege, he wanted\u00a0support for a controversial 2015 merger between two company affiliates.
Rhee So-eui, a company representative, said Samsung did not make contributions to receive favors.
\u201cIn particular, we find it hard to accept the special prosecutor’s argument that Samsung has made improper requests related to the merger of Samsung affiliates or the leadership transition,\u201d Rhee said. \u201cWe believe the court will make the appropriate judgment on this matter. “
If the arrest warrant is issued and leads to an indictment, these would be the latest criminal charges in an unprecedented power-abuse scandal that has rocked South Korea\u2019s political system, leading to historic street protests in recent months.
\u201cThis thing is metastasizing all out of control,\u201d Robert Kelly, an associate professor at Pusan National University, said of the scandal. \u201cEvery day there\u2019s some new revelation.\u201d
South Korea\u2019s national legislature last month voted to impeach Park, who is suspended from daily presidential duties and, for now, remains immune to criminal charges. A constitutional court is weighing whether to permanently remove Park, whose appointed prime minister is the acting head of state.
Park has apologized repeatedly for the scandal but denied acting outside the national interest. She has also refused to cooperate with the various investigations into her actions.
Yet the allegations against the Samsung chief, who is known as Jay Y. Lee in the West,\u00a0stand out because of the firm\u2019s local and global prominence \u2014 and\u00a0as a sign that more business moguls tied to the scandal could face criminal scrutiny.
Cain said the allegations, if they lead to a conviction, could dislodge Lee as the company\u2019s de facto leader. \u201cThat would be groundbreaking in South Korea, since it\u2019s almost unheard of for a ruling family to be pushed out of corporate power.\u201d
Kelly, the Pusan National University professor, said South Korea’s government has a history of meddling in economic matters, creating an environment that invites corruption. \u201cIt\u2019s always putting businessmen and government bureaucrats around a table talking about money,\u201d he said.
Still, he said the case involving Samsung „carries a lot of weight. “
The special counsel in the case has probed whether the tech giant, the nation\u2019s largest conglomerate, donated more than $20 million to firms and foundations associated with Choi, the disgraced presidential confidant.
Choi, whose late father was an influential cult leader in South Korea,\u00a0is standing trial on an array of allegations that she used her influence with Park to obtain funds from numerous business, including Samsung. Investigators\u00a0want to know whether the payments led to the National Pension Service\u2019s\u00a0decision to back a controversial merger in 2015 between two Samsung affiliates, Samsung C&T Corp., and Cheil Industries\u00a0Inc.
Prosecutors on Monday charged Moon Hyung-pyo, the chairman of the National Pension Service, with\u00a0 perjury and abuse of authority.\u00a0
The merger was seen by corporate analysts as an effort to solidify Lee\u2019s dynastic succession over the tech giant\u2019s vast holdings. His title is vice chairman, but he\u2019s essentially running the Samsung Group after his father\u2019s incapacitating heart attack in 2014.
Prosecutors last week called the younger Lee, a tall, bespectacled man who attended Harvard Business School, to discuss the bribery allegations. He reportedly answered questions, off and on, for 22 hours. Some reports suggested Lee, worth an estimated $6 billion, was allowed only a $5 box meal during the grilling.\u00a0
Lee, with a polite smile and escorted by a lawyer, arrived at the counsel\u2019s office\u00a0about 9:30 a.m. Thursday, shuffling through a crush of reporters. \u201cI am deeply sorry, and I apologize to the Korean people for failing to put our best face forward due to this incident,\u201d he told reporters before bowing and entering the office. He didn\u2019t leave until the next morning \u2014\u00a0again amid a mass of media.\u00a0
During the questioning, a spokesman for the special counsel said prosecutors had been considering whether to charge Lee with bribery and perjury. Prosecutors had already asked him in mid-December not to leave the country.
Unlike in the United States, many high-profile South Korean investigations involving large companies or political figures play out publicly. Prosecutors leak investigative details, conduct high-profile searches and summon suspects for questioning with dozens of reporters present \u2014 public displays that typically foretell criminal charges.
The case against Lee, however, remained a shock\u00a0\u2014 despite the weeks of public hints that charges could be coming.
The company and Lee have said they made payments to Choi\u2019s foundations \u2014\u00a0even reportedly buying a nearly $1 million dressage horse for her daughter, a noted equestrian athlete. The firm has said the payments were philanthropic and supported national sports programs, denying accusations that it sought to ease the merger.
The Samsung Group\u00a0is no stranger to criminal crises at the top of its empire.
Lee\u2019s father, chairman Lee Kun-hee, took over Samsung in 1987. He was forced to resign in 2008 amid charges related to a slush fund to promote Samsung\u2019s interests. He was fined nearly $100 million and served a suspended sentence, even though prosecutors recommended that he be sent to prison. The elder Lee regained control of the company in 2010, but has been incapacitated since 2014.
The Samsung Group is just one of several South Korean conglomerates that donated funds to Choi\u2019s foundations, raising the specter that other corporate titans could also be felled by the scandal.
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Anthony Lynn was formally introduced at the StubHub Center \u2013 a 30,000-seat stadium where the Los Angeles Chargers play their home games for the next two years \u2013 and he got off to a rough start.<\/p>\n