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South Korea Prosecutor Seeks Arrest of Samsung Group Leader in Bribery Case

If Mr. Lee is arrested, it will be a landmark in South Korea’s efforts to fight corruption in the country’s powerful family-controlled conglomerates, known as chaebol, and could disrupt his efforts to inherit management control of Samsung.

His arrest on a bribery charge would further corner Ms. Park, who is on trial at the Constitutional Court. During the trial, prosecutors representing the National Assembly, which voted on Dec. 9 to impeach her, argued that Ms. Park and Ms. Choi colluded to collect millions from Samsung and other big businesses and that the money was either coerced from businesses or was collected as bribes in return for political favors. Ms. Park and Ms. Choi have denied any wrongdoing.

Although Samsung has often been investigated on corruption allegations, neither Mr. Lee nor his father has spent time in jail. The senior Mr. Lee was convicted of bribery in 1996, and of tax evasion and breach of trust in 2009, but in each case, he was not arrested, and his prison terms were suspended. Each time, his criminal records were later erased in presidential pardons, and he soon returned to Samsung’s leadership.

The South Korean government and the judiciary have also been similarly lenient toward business tycoons convicted of white-collar crimes, raising doubts among foreign investors hoping for tighter corporate governance in South Korea and deepening public mistrust of the country’s justice system.

Lee Kun-hee, the chairman, has been incapacitated since a heart attack in 2014. His son, Mr. Lee, has since been running the conglomerate, which has an annual revenue of 270 trillion won, or $ 229 billion. Its crown jewel, Samsung Electronics, alone accounts for 20 percent of South Korea’s total exports.

Like most other corruption scandals in the chaebol, the trouble at Samsung stemmed from allegations that the company used bribery and other illegal tools to help the father transfer management control to his son.

In 2009, the senior Mr. Lee was convicted of evading taxes on 4.5 trillion won, or $ 3.8 billion, that he secretly inherited from his father, the Samsung founder Lee Byung-chull, and kept hidden in bank and securities accounts of Samsung executives. He was also convicted of involvement in helping his son, Mr. Lee, buy stocks of a Samsung subsidiary at an illegally low price.

In the current scandal, Samsung was accused of making donations for Ms. Choi in exchange for a decision by the government-controlled National Pension Service to support a contentious merger of two Samsung affiliates in 2015. Moon Hyung-pyo, chairman of the pension fund, was indicted on Monday on charges that he illegally pressured the fund to back that merger when he was South Korea’s health and welfare minister.

The special prosecutor is investigating whether Mr. Moon acted on behalf of Ms. Park.

The national pension fund’s support was crucial for the merger, which analysts said helped Mr. Lee inherit control of Samsung from his father. Elliott Management, an American activist hedge fund, and other investors in Samsung had campaigned to block the merger, saying that it wronged minority shareholders by grossly undervaluing the shares of one of the two Samsung companies, Samsung C&T.

Allegations that Ms. Park helped Ms. Choi extort millions in bribes from Samsung and other companies are at the heart of the corruption scandal that led to the impeachment vote. Since then, Ms. Park’s powers have been suspended, and the Constitutional Court will decide whether to end her presidency.

In November, state prosecutors indicted Ms. Choi on charges of coercing 53 big businesses, including Samsung, to contribute $ 69 million to her two foundations. They identified Ms. Park as an accomplice but stopped short of filing any charges against the businesses, all of which insisted that they were under government pressure to donate the money.

Samsung gave the largest donations to Ms. Choi’s foundations, totaling $ 17 million. Unlike the other corporate contributors, it went beyond the donations for the foundations, including signing an $ 18 million contract with a sports management company that Ms. Choi ran in Germany, with the money used to fund a program for training Korean equestrians that mainly benefited Ms. Choi’s daughter. Samsung also contributed $ 1.3 million to a winter sports program for young athletes that Ms. Choi and her nephew ran.

Last month, Mr. Lee testified at a National Assembly hearing that he was not involved in the decision by Samsung to make the donations. He also said that the donations were not voluntary, suggesting that the company was a victim of extortion, not a participant in bribery.

But the special prosecutor’s team said it had evidence that Mr. Lee himself ordered the donations after receiving a request from Ms. Park. It questioned him on Thursday.

Source: NYT > World

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