A South Korean special prosecutor's office will question Samsung Group [SAGR.UL] leader Jay Y. Lee as a suspect in a widening influence-peddling scandal that may force President Park Geun-hye from office.
Prosecutors have been looking into whether Samsung payments of about 30 billion won ($25 million) for a business and foundations backed by Park's friend, Choi Soon-sil, were connected to a 2015 decision by the national pension fund to back a controversial merger of two group affiliates.
Park could become South Korea's first democratically elected leader to leave office early after parliament voted in December to impeach her over the corruption scandal, which has triggered big weekly rallies calling for her to step down. The impeachment must be upheld or overturned by the Constitutional Court.
He declined to comment on whether Jay Y. Lee or other Samsung executives will be indicted but would not rule out the possibility of the prosecution seeking an arrest warrant against Lee. A Samsung Group spokeswoman declined to comment.
Proving quid-pro-quo dealings between the Choi-linked organizations and Samsung are critical to prosecution efforts to bolster its case against President Park and show that she, or a surrogate such as Choi, collected bribes in exchange for favors, analysts said.
For Samsung and its founding Lee family, an indictment or conviction of Jay Y. Lee would deal a blow to efforts to secure a stable transfer of control to heirs from ailing patriarch Lee Kun-hee.The conglomerate has undergone major restructuring since 2014 to streamline its ownership structure and consolidate power under Jay Y. Lee and his two sisters.
Park Ju-gun, head of corporate analysis firm CEO Score, said while professional managers at affiliates such as Samsung Electronics would be able to keep the companies operating smoothly in the absence of Jay Y. Lee, key initiatives such as acquisitions and investments into new businesses would inevitably be slowed should the 48-year-old be imprisoned.
"I think Samsung Group is facing a bigger crisis than even the death of Chairman Lee Kun-hee," he said, referring to billions of dollars in inheritance taxes the Lee family heirs will be forced to pay when their father dies.
SEEKING A LINK
Samsung has acknowledged making contributions to two foundations as well as a consulting firm controlled by Choi but has repeatedly denied accusations of lobbying to push through a controversial 2015 merger of its Samsung C&T and Cheil Industries Inc units.
The prosecution this week summoned two senior Samsung Group officials for questioning, though they were listed as witnesses.
National Pension Service chief Moon Hyung-pyo was arrested in December after acknowledging he pressured the fund to approve the merger while he was health minister.
Park, 64, has described support of the merger as a policy decision made by the world's third-largest pension fund in the national interest.
Lee denied bribery accusations during a December parliamentary hearing, rejecting assertions from lawmakers that Samsung lobbied to get the fund to back the merger.
The special prosecutors' office said on Wednesday it was looking into whether Lee gave false testimony during the parliamentary hearing.
"The special prosecutor needs Samsung to establish a potential bribery charge against President Park Geun-hye," said Shin Yul, a political science professor at Myongji University.
"Samsung is the one that has made the biggest contributions among conglomerates and it had an exclusive relationship with Choi Soon-sil, buying a horse," Shin said, referring to the firm's sponsorship of Choi's daughter's equestrian career.
The daughter, Chung Yoo-ra, was arrested in Denmark this month after being sought by South Korean authorities.