Samsung boss arrested in Korean bribery scandal

Seoul South Korea

Lee Jae-yong Seoul South Korea

Lee is accused of making improper payments to the nation's president, Park Geun-Hye, and her associate Choi Soon-sil in a major scandal.

South Korea's special prosecutor's office said on Wednesday it had expanded charges against Samsung Group chief Jay Y. Lee to include hiding the proceeds of a criminal act before it made a decision to seek a warrant for his arrest.

Lee started out at Samsung Electronics in 1991, working his way up to vice chairman in 2013.

The Samsung vice chairman was also accused of lying under oath during a December parliamentary hearing over the presidential scandal.

His arrest immediately placed Samsung Group on "high alert" over the effects of a leadership vacuum, according to local news agency Yonhap, amid the latest developments could have negative consequences for the South Korean economy.

President Park, who was voted for impeachment in December, and her now jailed friend Choi Soon-Sil, denied wrongdoings involving the business.

The head of corporate analysis firm CEO Score, Park Ju-gun, said if Lee was arrested, it would affect some long-term operating decisions as well as his plans to consolidate management control of the group.

Lee's arrest will cause an immediate void in the Samsung Group's leadership, a awful scenario that the company has been bracing for a while.

Investigators want Mr Lee taken into custody after a first attempt in January was rejected by a court due to a lack of evidence, said Hong Jung-seok, a spokesman for the special prosecutor's team overseeing the probe.

Eurasia Group senior analyst Scott Seaman said in a note that Lee's arrest increased pressure on the Constitutional Court to also uphold Park's impeachment.

Prosecutors claim Samsung paid up to 43 billion won ($37.6 million) in bribes to South Korean officials to secure government favors, primarily relating to the merger of two Samsung units. Prosecutors can detain him for up to 20 days before formally indicting him.

Lee's father and ailing Samsung chair Lee Kun-hee has been convicted in the past of embezzlement, tax evasion and breach of trust but was never imprisoned.

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