SEOUL Samsung Group chief Jay Y. Lee was
arrested early on Friday over his alleged role in a corruption
scandal that led parliament to impeach South Korean President
Park Geun-hye, dealing a fresh blow to the world's biggest maker
The 48-year-old Lee, vice chairman of Samsung Electronics Co
Ltd, was taken into custody at the Seoul Detention
Centre, where he had awaited the court's decision following a
day-long, closed-door hearing that ended on Thursday evening.
The judge's decision was announced at about 5:30 a.m. (2030
GMT) on Friday, more than 10 hours after Lee, the sprawling
conglomerate's third-generation leader, had left the
Shares in Samsung Electronics opened down 1.2 percent, while
shares in Samsung C&T Corp, the de facto holding
company of Samsung Group, opened down 3.2 percent compared with
the wider market's drop of 0.45 percent.
A spokeswoman for Samsung Group said no decision
had been made about whether Lee's arrest would be contested or
whether bail would be sought.
The same court rejected a request from prosecutors last
month to arrest Lee. On Tuesday, the special prosecutor's office
had requested a warrant to arrest him and another executive,
Samsung Electronics president Park Sang-jin, on bribery and
The court rejected the request to arrest Park, who also
heads the Korea Equestrian Federation, saying it was not needed
given his "position, the boundary of his authority and his
The prosecution said it had secured additional evidence and
brought more charges against Lee in the latest warrant request.
"We acknowledge the cause and necessity of the arrest," a
judge said in his ruling, citing the extra charges and evidence.
Samsung and Lee have denied wrongdoing in the case.
"We will do our best to ensure that the truth is revealed in
future court proceedings," the Samsung Group said in a brief
statement after Lee's arrest.
While Lee's detention is not expected to hamper day-to-day
operation of Samsung Group companies, which are run by
professional managers, experts have said it could affect
strategic decision-making by South Korea's biggest conglomerate.
"There are more than 100,000 of us (in Samsung Electronics).
It wouldn't make sense for a company of that size to not
function properly just because the owner is away. It's business
as usual for us," said an engineer at Samsung Electronics, who
declined to be identified.
Samsung Group, a key driver of Asia's fourth-largest
economy, has been engaged in a restructuring process as it
clears a succession path for Lee to assume control after his
father, Lee Kun-hee, was incapacitated by a heart attack in
"It is not like Samsung's business will be grinding to a
halt. There are many smart people at the company," former
Samsung Electronics executive Kim Yong-serk said recently.
However, Lee's arrest would have an impact on longer-term
investment decisions, said Kim, now a professor at Sungkyunkwan
"Samsung presidents are evaluated on an annual basis, so
they cannot make bold bets about the future. They need a
chairman when making long-term investment decisions," he said.
Samsung is also the world's biggest maker of memory chips
and flat screen TVs.
Lee's arrest gives a boost to prosecutors who have zeroed-in
on Samsung Group to build their case against President Park and
her close friend Choi Soon-sil, who is in detention and faces
charges of abuse of power and attempted fraud.
Both Park and Choi have denied wrongdoing.
Prosecutors have focused their investigations on Samsung's
relationship with Park, 65, who was impeached by parliament in
December and has been stripped of her powers while the
Constitutional Court decides whether to uphold her impeachment.
They accused Samsung of paying bribes totaling 43 billion
won ($37.74 million) to organisations linked to Choi to secure
the government's backing for a merger of two Samsung units.
That funding includes Samsung's sponsorship of the
equestrian career of Choi's daughter, who is in detention in
Denmark, having been on a South Korean wanted list.
If parliament's impeachment is upheld by the Constitutional
Court, Park will become South Korea's first democratically
elected leader to be forced from office early.
Park remains in office but stripped of her powers while she
awaits the Constitutional Court's decision.
"This is a painful event for Vice Chairman Lee," said Kim
Sang-jo, a shareholder activist and economics professor at
Hansung University who was questioned by the special prosecutor
as a witness in the probe.
"But this will be an important opportunity for Samsung Group
to sever ties with the past," he said, referring to links
between the government and the country's conglomerates, also
known as chaebol.
(Additional reporting by Joyce Lee, Ju-min Park and Cynthia