South Korean prosecutors seek to arrest Samsung heir

Jay Y. Lee co-vice chairman of Samsung Electronics Co. center is surrounded by members of the media as he leaves the special prosecutors office in Seoul South Korea on Friday Jan. 13 2017

A prosecutor's call for the arrest of Jay Y. Lee, the vice- chairman of Samsung and the only son of Samsung's incapacitated chairman, Lee Kun-hee, brings new scrutiny to the deep ties between top government officials and the handful of corporations that dominate South Korea's economy.

When millions of people took to the streets to demand the ouster of now impeached President Park Geun-Hye in the latest bribery scandal, they also demanded the paymasters be punished. Samsung lawyers are expected to argue against an arrest warrant, saying Lee has already been banned from traveling overseas and so is not a flight risk. A hearing is scheduled for Wednesday.

If the court upholds the impeachment, a presidential vote will be held in 60 days, with Park immediately losing executive privilege that protects her from criminal indictment.

"The special prosecutor considered the economic impact when seeking an arrest warrant, but he thought it is more important to seek justice", Lee Kyu-chul, a spokesman for the prosecutor's office, said this week.

"While the prosecutors are still going to be looking into things, and this doesn't necessarily close the case, this is definitely the outcome Samsung was looking for", he said.

The elder Lee was convicted twice on bribery, embezzlement and other charges in 1996 and 2008, but he was never imprisoned. The prosecutors said they had evidence that Mr.

"Such lack of transparency is Samsung's biggest weakness that makes it vulnerable to outside criticism. or to political pressure" to offer bribes, said Kim Sang-Jo, economics professor at Hansung University.

Samsung said in an emailed statement that it appreciated "the fact that the merits of this case can now be determined without the need for detention". Park is still officially in office and is waiting to see whether the Constitutional Court will overrule that decision and leave her in power, which doesn't seem likely to happen.

Now, as Samsung's flagship electronics unit struggles to emerge from its recall of the Galaxy Note 7 smartphone previous year, its leader has become embroiled in the scandal.

Their plan to expand the bribery probe to Park may have hit a snag with the denial of the request to arrest Lee. Lee could hurt the national economy by disrupting Samsung's management. Much of the money was allegedly channeled to "charities" and funds controlled by the broker, Ms. Choi, who was arrested in December.

In addition, Samsung donated 20,400 billion won (16.2 million Euros and 17.2 million dollars) to two nonprofit foundations linked to Choi between 2015 and 2016.

Minority shareholders of Samsung C&T, including the USA hedge fund Elliott Management, opposed the merger, saying it benefited the Lee family at their expense. The US Foreign Corrupt Practices Act (FCPA) states that US companies listed on the US stock market are subject to business restrictions, large fines, and other punishments for offering bribes in third countries. Lee to gain influence over the sprawling conglomerate.