South Korean court dismisses arrest warrant for Samsung chief

Reuters News
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Posted: Jan 18, 2017 3:02 PM

By Joyce Lee

SEOUL (Reuters) - A South Korean court on Thursday dismissed a warrant to arrest the head of the Samsung Group [SAGR.UL], the country's largest conglomerate, amid a graft scandal that has led to the impeachment of President Park Geun-hye.

The pre-dawn decision by the Seoul Central District Court to allow Jay Y. Lee to go home is likely to come as a major relief to Samsung Group, which the 48-year-old has led after his father and founding Lee family patriarch Lee Kun-hee was incapacitated after a May 2014 heart attack.

Lee, who had been questioned for 22 hours last week and was held overnight on Wednesday while the court reached its decision, is still under investigation for bribery, embezzlement and perjury and could still be arrested at a later date.

He left the Seoul Detention Centre carrying a white shopping bag and climbed into a car without talking to reporters.

The special prosecutor sought an arrest warrant against Lee, charging him of bribing Park's confidant Choi Soon-sil to win key support from South Korea's National Pension Service in order to secure a controversial 2015 merger of two Samsung Group affiliates. The merger helped cement his control over the smartphones-to-biopharmaceuticals business empire.

The judge said in a statement on his ruling to deny the warrant that an arrest now was not necessary, however.

"After reviewing the contents and the process of the investigation so far ... it is difficult to acknowledge the necessity and substantiality of an arrest at the current stage," he said.

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". The group's flagship, Samsung Electronics <005930.KS>, is the world's biggest maker of smartphones, flat-screen televisions and memory chips.

The special prosecutor's office said it will make a statement on the court's ruling at 10 a.m. (0100 GMT) Thursday without elaborating further.

The special prosecutor's office on Monday said it would seek a warrant to arrest the group's third-generation leader. Lee has denied wrongdoing.

Park, 64, was impeached last month by parliament over the influence-peddling scandal. If the decision is upheld by the Constitutional Court, she will become South Korea's first democratically elected leader to be forced from office early.

Park, who remains in office but stripped of her powers while the court decides her fate, has also denied wrongdoing.

The special prosecutor has accused Lee of paying bribes totaling 43 billion won ($36.70 million) to organizations linked to Choi, a friend of the president who is at the center of the scandal, to secure the 2015 merger of Samsung C&T Corp and Cheil Industries Inc.

This week, the special prosecutor indicted the chairman of the National Pension Service, the world's third-largest pension fund, on charges of abuse of power and giving false testimony in relation to the deal.

Key Samsung Group shares opened higher following the court's decision: Samsung Electronics stock was up 1.4 percent as of 0045 GMT while shares of Samsung C&T Corp <028260.KS> were up 2 percent, outperforming a 0.3 percent rise for the broader market <.KS11>.

HDC Asset Management fund manager Park Jung-hoon said the stock was regaining losses suffered after the prosecution announced its decision to seek an arrest warrant for Lee earlier this week.

"The only thing that has changed is that he now won't be detained," Park said, adding upside for the shares will be limited as the Samsung Group leader will likely be indicted in the future over the charges.

(Additional reporting by Ju-min Park, Se Young Lee and Christine Kim; Writing by Nick Macfie; Editing by Kevin Liffey and Lincoln Feast)