Samsung heir indicted on bribery and embezzlement charges

Lee Jae-yong stands accused of paying close to $40 million in bribes to a presidential confidante. Prosecutors also accuse the head of South Korea's largest company of hiding assets overseas and committing perjury.

Special prosecutors announced on Tuesday that they would charge Lee Jae-yong and four other Samsung executives with bribery, embezzlement and other offenses linked to a corruption scandal that has shaken South Korea, leading to an impeachment process against President Park Geun-hye.

Lee is accused of "donating" 43 million won ($37.3 million; 35.2 million euros) to nonprofit foundations run by Choi Soon-sil, a close confidante of the president,  in return for favors from the Park administration, including the approval of a controversial merger between two Samsung sub-divisions in 2015. Prosecutors also believe that Lee hid assets overseas, committed perjury and concealed proceeds from criminal activities.

If convicted, he could face up to 20 years in prison.

Organizations run by Choi Soon-sil allegedly received close to $37.3 million from the Samsung heir

The 48-year-old Samsung heir has denied any wrongdoing.

On Monday, South Korea's acting president, Hwang Kyo-ahn, denied an extension for the special investigation into the Park corruption scandal, forcing the prosecutor's office to decide whether to indict Lee and other Samsung executives by Tuesday. Investigators have not yet been able to interview President Park.

Samsung stands to take a severe hit from Lee Jae-yong's arrest and indictment. Though Lee is technically only the vice-chairman of the company, he has been considered its de-facto head since his father suffered a heart attack in 2014.

Powerful family-controlled conglomerates

In a brief email sent out shortly after the prosecutors' announcement on Tuesday, Samsung said that three of the five men who had been indicted had resigned. Lee Jae-yong was not named, implying that he will stay on as de-facto chairman during the upcoming trial.

The company also promised an internal restructuring. It said that it would dismantle its central coordinating body, allowing each company unit to run more independently, lessening the focal lobbying power of the cooperation. 

Anti-corruption protests had erupted in South Korea following the revelation that a confidant of President Park had allegedly received millions in bribes

Anti-corruption watchdogs were skeptical of Samsung's intentions. "It is yet to be seen whether this is another cosmetic measure aimed to divert public criticism," Chung Sun-Sup, the head of chaebul.com, an online forum dedicated to the operations of Korean conglomerates, told reporters. In an interview with news agency AFP, Chung had previously accused Samsung of dissolving "group-controlling organizations when it got caught in breach of laws, only to revive them afterwards under different names."

When the Park scandal first hit Samsung, the company had promised that it would disband its secretive Corporate Strategy Office, a panel of close Lee family aides who worked to help ensure the father to son leadership transition. The office allegedly orchestrated the bribe for Choi Soon-sil to secure the 2015 merger, a crucial step in strengthening the younger Lee's grip on Samsung.

Related Subjects

The tech-giant is the largest of several powerful family-controlled conglomerates known as "chaebol" that dominate the South Korean economy. Corruption charges have dogged many of these businesses, including Samsung under the elder Lee's reign. In 2008, his father,Lee Kun-hee, was convicted for tax evasion and a breach of trust. A former president later pardoned the 75-year-old. 

South Korea's unending political crisis

Extortion and manipulation

On Monday, a Danish court extended the detention of Chung Yoo-ra, the daughter of Choi Soon-sil, the woman at the centre of a corruption scandal that led to the impeachment of Park Geun-hye, South Korea's president. Choi is accused of influencing government policy and getting rich through extortion and manipulation.

South Korea's unending political crisis

South Korea's 'Rasputin'

Choi is in custody on charges of meddling in state affairs without holding a government position and using her connections with the president to extort vast sums of money from many of South Korea's best-known companies. Beyond the legal charges, she is being blamed for both effectively bringing down the government of President Park and leaving her reputation and political legacy in tatters.

South Korea's unending political crisis

Defiance

Last month, Park did not turn up to testify in a court case which will decide her future. The president was impeached over a multifaceted corruption scandal in December.

South Korea's unending political crisis

Fall from grace

After her impeachment, Park Geun-hye is regarded both as a perpetrator and a victim. Her future is uncertain as the country struggles to recover from a political scandal.

South Korea's unending political crisis

Calls for early elections

Tens of thousands of protesters have taken to the streets since the start of the corruption scandal, calling on President Park to step down. South Korea's Constitutional Court is deciding whether to formally unseat Park or restore her power. If she is forced out, a new election would be held within two months to choose her successor.

South Korea's unending political crisis

Scandal reaches top of the 'chaebols'

South Korea's corruption scandal has spilled over into the highest levels of business. The vice-chairman of Samsung, Lee Jae-yong, was questioned last month by investigators who are seeking evidence that he paid bribes to Choi Soon-sil. Given the economic and political importance of Samsung in South Korea, if Lee is indicted, it could be on the same level of President Park's impeachment.

South Korea's unending political crisis

The split

In December, a group of lawmakers from South Korea's ruling Saenuri Party abandoned Park to form a new party, tentatively named the New Conservative Party for Reform (NCPR). The party infighting is another blow to Park.

South Korea's unending political crisis

Ban drops out of presidential race

Former United Nations Secretary General Ban Ki-moon has declared that he won't run for South Korea's presidency. He had been expected to seek the position after a corruption scandal saw President Park impeached. The newly-formed NCPR was hoping that Ban would join their ranks.

mb/kms (AP, AFP, Reuters)