Samsung’s heir apparent Lee Jae-yong was arrested early Friday morning for bribery, embezzlement and perjury in connection with a massive corruption scandal that is poised to topple South Korean President Park Geun-hye.

His arrest will deal a blow to the country’s biggest conglomerate by creating a leadership vacuum while its crown jewel, Samsung Electronics, scrambles to revive the fortunes of its mobile business following the costly safety debacle of the fire-prone Galaxy Note 7 smartphone last year.

Han Jung-seok, a judge at the Seoul Central District Court, said on Friday that Mr Lee’s arrest was warranted, given new crimes revealed by a special prosecutor and additional evidence in support. The country’s independent counsel investigating President Park’s influence-peddling scandal has accused the 48-year-old de facto leader of Samsung Group of making millions of dollars of political donations in return for business favours.

Mr Lee, vice-chairman of Samsung Electronics, is also suspected of hiding assets overseas and concealing profits made from illicit business activities, as well as lying under oath about his role in a graft scandal that led to the parliamentary impeachment of President Park last December, according to the special prosecutor’s investigation team.

Mr Lee is the highest profile business figure engulfed by the graft scandal. He has denied any wrongdoing but could spend months in jail while awaiting trial. His arrest, which came after more than 15 hours of interrogation by the investigation team on Monday, is expected to hamper Samsung’s strategic decision-making such as new large-scale investments and acquisitions and a group-wide restructuring plan such as setting up a holding company.

Samsung Electronics is the world’s largest maker of memory chips, display panels and smartphones. Samsung Group permeates almost every aspect of South Korean life, accounting for about 20 per cent of South Korea’s economy.

The special prosecutor’s investigation team has less than two weeks before wrapping up their investigation into the scandal at the end of this month unless Prime Minister Hwang Kyo-ahn allows extending the investigation period. President Park remains in office though stripped of her powers while the constitutional court deliberates her impeachment by parliament.

Get alerts on Samsung Electronics Co Ltd when a new story is published

Copyright The Financial Times Limited 2021. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article