Samsung Group's head quizzed by prosecutors

Seoul

SAMSUNG Group leader Jay Y Lee appeared at the South Korean special prosecutor's office on Thursday for questioning, on suspicion of bribery in an influence-peddling scandal that may force President Park Geun-hye from office.

The country's top conglomerate has become key in the investigation of Ms Park, who was impeached by parliament last month over the corruption scandal. She will be the country's first democratically elected leader to be removed from office if the court upholds the impeachment. She has denied wrongdoing.

At the prosecution office on Thursday, crowds of protesters were holding signs calling for Mr Lee's arrest and accusing him of being the tainted president's accomplice. As he arrived at the scene in a sedan, he said: "I am very sorry to the South Korean people for not showing a better side."

He bowed after making brief remarks to reporters.

Parliament impeached Ms Park over allegations that she allowed her friend, Choi Soon-sil, to exert inappropriate influence over state affairs. Ms Choi has been accused of colluding with Ms Park to pressure big businesses, including the Samsung Group, to contribute to non-profit foundations backing the president's initiatives.

Ms Choi, on trial on charges of abuse of power and attempted fraud, has denied wrongdoing.

Prosecutors had named Mr Lee a suspect on Wednesday and are investigating whether Samsung gave 30 billion won (S$35.9 million) to a business and foundations backed by Ms Choi in exchange for the national pension fund's support for a 2015 merger of Samsung C&T Corp and Cheil Industries Inc.

Proving improper dealings between Ms Park, Ms Choi and Samsung would be key for the prosecutors' case, analysts said, noting their goal is to prove Ms Park or her surrogates such as Ms Choi took bribes from corporations in exchange for favours.

The prosecution spokesman on Wednesday would not rule out the possibility of investigators seeking an arrest warrant for Mr Lee, 48, who last month denied accusations that the Samsung group sought to win the favour of Ms Park or Ms Choi to secure the 2015 merger, a deal seen as key to ensuring his control of the conglomerate.

Investigators questioned two senior Samsung Group executives this week as witnesses.

The scandal has triggered weekly rallies calling Ms Park's resignation. She has apologised and said this month that the pension fund's support for the Samsung companies' merger was in the national interest.

If she were to leave office, a presidential election would be held within 60 days. Among the expected contenders is former UN Secretary-General Ban Ki-moon.

Mr Lee took over as leader of the smartphones-to-pharmaceuticals conglomerate after his father, founding family patriarch Lee Kun-hee, had a heart attack in 2014. The younger Lee's arrest or indictment would be a blow to Samsung and the family, which has been streamlining its business to ensure a stable transfer of control from the ailing patriarch to his children.

While analysts and investors said management would be able to keep the various affiliates, including Samsung Electronics Co Ltd, in good shape, the conglomerate as a whole may be slower to commit to major investments or acquisitions if the younger Lee lands in jail.

Share prices of most Samsung companies showed muted reaction to his alleged role in the scandal, however. Samsung Electronics shares were trading flat around mid-day on Thursday; Samsung C&T shares were up 0.8 per cent, compared with a 0.3 per cent rise for the broader market.

IBK Asset Management fund manager Kim Hyun-su said: "It's possible that Samsung Group companies will try to behave more transparently in response and operate in a fairer manner that shareholders can rationally understand." REUTERS