Samsung's involvement in the "Choi-gate" corruption probe facing South Korean President Park Geun-hye may go all the way to the top of the company.
A special prosecutor has named Jay Y. Lee, the vice chairman of Samsung Electronics and the de facto head of the organization's parent company (Samsung Group), as a suspect in a bribery investigation, according to Bloomberg. Investigators have also asked parliament to file perjury charges against Lee over testimony he gave to South Korea's National Assembly last month. He will be called for questioning at 9:30 a.m. local time Thursday, the publication said.
At issue is whether millions in donations Samsung made to two foundations controlled by President Park's friend and confidant, Choi Soon-sil, were bribes to get the South Korean pension fund to back a merger between two of Samsung Group's holding companies. The merger strengthened the Lee family's control over Samsung.
Samsung Chairman Kun-Hee Lee has been in poor health for the past couple of years, and his only son, Jay Y. Lee, has assumed some responsibilities overseeing the conglomerate that makes up more than a fifth of South Korea's gross domestic product. The younger Lee was handpicked by his father to one day take control of the company. An investigation -- or even worse, a prosecution -- by the South Korean government could delay those plans.
Having its leader named as a bribery suspect is the last thing Samsung needs right now. The company continues to dig itself out of the troubles from the massive recall of its defective Galaxy Note 7 smartphone.
A Samsung Group representative declined to comment.
A country in turmoil
South Korea's government has been in an uneasy state over allegations that President Park confided in her friend Choi, who has no official role in the government. Choi in turn has been accused of extorting millions in bribes. Prosecutors have indicted Choi and two of Park's former aids for extortion, fraud and divulging classified information. Millions of protesters have gathered on the streets to demand Park's ouster, and the Korean National Assembly last month voted to impeach her.
The parent company of Samsung Electronics became ensnared in the "Choi-gate" corruption probe facing Park a few months ago. Its offices have been raided several times on suspicion that the presidential office influenced the decision by South Korea's state-run pension fund to back Samsung's merger plan last year.
Samsung Group has many various holdings along with its electronics business. Last year, it completed an $8 billion merger between its C&T Corp. construction and trading business and Cheil Industries fashion and chemicals business to solidify the Lee family's hold on the company. Combining C&T and Cheil gave the younger Lee a bigger stake in the companies. Some shareholders contested the merger, but it was approved in July 2015.
The South Korean pension fund, which held an 11.6 percent stake in Samsung C&T and a 5 percent stake in Cheil Industries, was important in approving the merger. Authorities now are looking at whether President Park pressured the fund to back the merger in return for Samsung giving favors to Park's friend and longtime confidante Choi.
Lee testified during a National Assembly hearing last month that he didn't play a role in Samsung's decision to make $17 million in donations to Choi, according to The New York Times. "He also said that the donations were not voluntary, suggesting that the company was a victim of extortion, not a participant in bribery," the publication said.
Along with the donations, Samsung also signed an $18 million contract with a sports management company Choi ran in Germany, the Times said, as well as gave $1.3 million to a winter sports program run by Choi.
Update at 2:20 p.m. PTwith Samsung Group declining to comment.
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