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Samsung group heir-apparent arrested on bribery charges

SEOUL (Kyodo) -- Samsung group heir apparent Lee Jae Yong was arrested by prosecutors Friday on bribery and other charges linked to an influence-peddling scandal that led to the impeachment of South Korean President Park Geun Hye, causing a setback to the country's largest business conglomerate.

    The 48-year-old vice chairman of Samsung Electronics Co. was taken into custody after the Seoul Central District Court approved early Friday morning the special prosecutors' second request for a warrant to arrest him, making Lee the first Samsung leader to be detained in a criminal investigation.

    The arrest has dealt a fresh blow to Samsung at a time when it is hoping to rebuild consumer confidence following last year's global recall of its Galaxy Note 7 smartphone due to safety issues. It also raises concerns that a leadership vacuum would delay major business decisions in the group.

    "The rationale for and the necessity of (Lee's) arrest is acknowledged considering the new charges and additional evidence collected," the court said of its decision, according to Yonhap News Agency.

    Lee is suspected of offering bribes to the president's confidante Choi Soon Sil in exchange for the state-run pension fund's backing of a merger of two Samsung affiliates in 2015, a move believed to have been aimed at solidifying Lee's influence in the company as heir apparent.

    The special prosecutors' first request to arrest Lee, on charges of bribery, embezzlement and perjury, was rejected by the court last month.

    However, after about three weeks of additional investigations, they leveled more charges against Lee for allegedly hiding criminal proceeds and violating the law on transferring property abroad in the process of giving bribes to Choi, who is currently in detention, Yonhap said.

    Lee has effectively led the Samsung group since his father, Chairman Lee Kun Hee, suffered a heart attack in May 2014. The third generation business tycoon has denied any wrongdoing.

    "We will do our utmost to ensure the truth will be revealed in court," Samsung Electronics said in a statement on Friday.

    The special prosecutors' team alleges that Samsung gave bribes to Choi worth 43 billion won ($37.4 million), including some money promised but not handed over, in return for the government's backing of the merger.

    Prior to submitting their second request to arrest Lee, the special prosecutors, led by Independent Counsel Park Young Soo, questioned him for a second time on the additional charges for nearly 15 hours from Monday morning to early Tuesday. They first questioned him on Jan. 12.

    The questioning focused on allegations that Samsung struck a 22 billion won contract with a German-based company owned by Choi and her daughter under the guise of a consulting arrangement to fund the daughter's equestrian training.

    Samsung officials fear the leadership vacuum could have a serious impact on the company's business operations. Samsung Electronics shares fell by over 1 percent after the Korea Stock Exchange opened on Friday morning, following news of the arrest.

    Since the scandal engulfing Samsung surfaced, the group has postponed its annual personnel reshuffle and company restructuring, which normally would have taken place in December, according to Yonhap. The electronics giant has also yet to lay out its business targets for this year.

    Meanwhile, Friday's arrest will likely give momentum to the special prosecutors in building their case against Park, who has been labeled by state prosecutors as a co-conspirator in various criminal charges brought against Choi and two of Park's former secretaries.

    The special prosecutors' investigation deadline is slated for the last day of this month, but the team submitted on Thursday their request to Acting President and Prime Minister Hwang Kyo Ahn to extend the period by one month.

    Park, whose five-year presidency ends in February 2018, fell into disgrace after being impeached by parliament in December, following massive street protests across the nation. She became the first president in South Korean history to face a criminal investigation as a primary suspect.

    The Constitutional Court, which is currently reviewing the legality of the impeachment, said Thursday it plans to hold the last hearing in the trial on Feb. 24. It did not give a specific date for delivering a verdict, but it is widely expected to be handed down around March 10.

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