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Samsung heir arrested in corruption probe

17 February 2017

Seoul Central District Court said it will hold a hearing on Thursday to review the arrest request.

"It is acknowledged that it is necessary to arrest (Lee Jae-Yong) in light of a newly added criminal charge and new evidence", a court spokesman said in a statement.

Lee's impending arrest comes a day after he was questioned for eight hours by the same Seoul court that previously denied a similar warrant request, citing lack of evidence. The scandal has rocked South Korea with millions of people taking to the streets in protest.

In seeking Lee's arrest for the second time, the prosecutors said the Samsung heir faces new charges in addition to bribery, embezzlement and lying under oath.

The court is also considering whether to issue an arrest warrant for Park Sang-jin, a president at Samsung Electronics and head of the Korea Equestrian Federation, who oversaw the company's external relations, including Samsung's contacts with Choi's company in Germany.

Lee and the Samsung Group [SAGR.UL] have denied any wrongdoing.

Samsung watchers have said Lee's arrest would not affect the day-to-day running of group companies including Samsung Electronics Co Ltd, which are run by professional managers, but a prolonged absence could impact longer-term and strategic decision making.

But prosecutors on Tuesday made a second bid for his arrest, saying they had collected more evidence in recent weeks.

South Korea is trying to establish whether the 48-year-old de facto leader of Samsung instructed the financial support to Choi Soon-sil, nicknamed the "Female Rasputin", in exchange for the government's backing for a merger between two of the group's subsidiaries.

Lee's arrest will likely shock the business community.

Lee is accused of giving bribes worth $36 million to Geun-hye and an associate to win government favors.

Samsung has "never" offered bribes to the president expecting something in return nor has it sought wrongful favors, the company said.

Lee Jae-yong took over the Samsung conglomerate in October 2016, after his father, Lee Kun-hee, suffered a heart attack in May 2014, which still keeps him hospitalised and unable to communicate.

Prosecutors are investigating whether Samsung had paid Choi to secure state approval for the controversial merger of two Samsung units seen as a key step towards ensuring a smooth power transfer to Lee.

When the merger of Cheil Industries Inc. and Samsung C&T Corp. was originally proposed, shareholders including activist investor Paul Elliott Singer fought against it, arguing the purchase price was too low and would cement the founding family's control at the expense of minority shareholders.

Samsung heir arrested in corruption probe