The Korea Herald

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Samsung in panic over request of arrest warrant for Lee again

By Korea Herald

Published : Feb. 14, 2017 - 14:07

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Samsung Group, the largest family-run conglomerate in South Korea, was in a panic Tuesday upon the special counsel’s request of an arrest warrant for its de facto chief Lee Jae-yong again and a separate request for one of senior executives, Samsung Electronics President Park Sang-jin.

The group declined to comment in the late afternoon, saying “An official stance on the special counsel’s announcement hasn’t been made yet.” 

The announcement came hours after the special counsel team said during a news briefing that they would review all relevant factors and make the decision in a day or two.

Lee Jae-yong (Yonhap) Lee Jae-yong (Yonhap)

“It’s not that we had ruled out the possibility, but we hoped for otherwise,” a group official told The Korea Herald. “We will have to focus on persuading (the judicial authority) that detention is not needed.”

Samsung had been on high alert throughout the day at the possibility of the reissuance after Lee’s second round of questioning by the Park Young-soo special counsel team on allegations of bribery, Monday.

After leaving the special counsel’s office following 15 hours of grilling at around 1 a.m. on Tuesday, Samsung Electronics Vice Chairman Lee immediately headed to the group’s headquarters in Seocho, southern Seoul.

According to sources, Lee held an emergency meeting with the top brass of the conglomerate to consider preparations as a precaution against the possibility of an arrest warrant being issued. 

“About 200 employees and executives of the Future Strategy Office were on standby,” said a group official. “The vice chairman convened a meeting with the heads of the seven teams under the office.”

“The vice chairman thinks he has explained sufficiently concerning the allegations,” the official added.

Lee is suspected of bribing President Park Geun-hye’s longtime confidante Choi Soon-sil to win political support for the controversial merger between two Samsung affiliates in 2015. The Samsung C&T-Cheil Industries deal was made possible by the support of the state-run National Pension Service, which was the largest shareholder of Samsung C&T. 

However, Lee faced new accusations in the second round of questioning, including one involving the Fair Trade Commission. The FTC ordered Samsung SDI, a battery making unit of Samsung, to reduce its equity holdings in Samsung Electronics three months after the merger in 2015. Samsung SDI disposed of 5 million Samsung Electronics shares to comply with the country’s regulator on cross-shareholdings among affiliates in October. The counsel team suspects the presidential office exerted influence to reduce the size of the required stock disposal by half, from an original 10 million shares.

The special counsel also suspects that financial authorities, including the Financial Services Commission, supported Samsung BioLogics’ listing on the Kospi last November.

This time, Samsung was especially concerned about the possibility of an arrest warrant not only for the group heir, but also for other executives who were questioned.

On Monday, two senior executives of Samsung -- Samsung Electronics President Park Sang-jin and Senior Executive Hwang Sung-soo -- were questioned over whether the sponsorship of Choi’s horseback rider daughter was under Lee’s instructions.

In total, five Samsung Group executives were called in as suspects, including the Future Strategy Office’s Choi Ji-sung and Chang Choong-ki, who had been summoned earlier.

Since the previous arrest warrant for Lee was rejected by a Seoul court on Jan. 19, citing a lack of evidence, the special probe team has been conducting a broader investigation into the connections between Samsung and President Park’s confidante Choi. 

By Song Su-hyun (song@heraldcorp.com)