Samsung's de facto leader formally charged with bribery

Jay Y. Lee, Samsung's vice chairman, has been indicted in connection with the political scandal in South Korea.

Shara Tibken Former managing editor
Shara Tibken was a managing editor at CNET News, overseeing a team covering tech policy, EU tech, mobile and the digital divide. She previously covered mobile as a senior reporter at CNET and also wrote for Dow Jones Newswires and The Wall Street Journal. Shara is a native Midwesterner who still prefers "pop" over "soda."
Shara Tibken
2 min read

Jay Y. Lee, vice chairman of Samsung, arrives at the Seoul Central District Court on January 18. This week, he was formally charged in connection to the political scandal in the country.

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South Korea's case against Samsung's de facto leader just got more serious, threatening the company's succession plan.

Jay Y. Lee, Samsung Group's 48-year-old vice chairman and the man slated to take over control of the company, was formally charged Tuesday with bribery in connection with the political scandal in South Korea, according to Bloomberg. He had been accused of bribing the suspended South Korean president, Park Geun-hye.

Lee was arrested a couple weeks ago. Along with bribery, Lee had also been accused of embezzlement and perjury.

Samsung Group, 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.

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.

Watch this: Samsung's top boss arrested

Kun-Hee Lee, chairman of Samsung Group, has hospitalized since suffering a heart attack in 2014, and his only son, Jay Y. Lee, has assumed responsibility 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. The move by the South Korean court to indict Lee raises questions about his future at the company.

Samsung has said it made the payments but denied they were made in exchange for political favors. Choi has denied taking any part in the merger, while Lee has testified that he didn't play a role in Samsung's decision to make $17 million in donations to Choi.

Last week, Samsung said it would strengthen its rules on financial donations to increase transparency in the wake of Lee's arrest. The South Korean company said it would now require financial donations and funding for corporate social responsibility of 1 billion won ($882,460) or more to be approved by the board of directors. Previously, only payments representing 0.5 percent of shareholder equity -- 680 billion won or more -- required board approval.

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