48 years old Jay Y Lee, vice-chairman of Samsung Electronics Co Ltd, was taken into custody at the Seoul Detention Center, where he waited for a day long for the court’s decision which was a closed door hearing that ended on Thursday evening.
Lee was arrested early morning on Friday over his alleged role in corruption that lead to parliament to impeach South Korean President Park Geun-hye in a dealing with world’s largest Smartphone and memory chip maker. a decision that if upheld by the Constitutional Court would make her the country’s first democratically elected leader forced from office.
Decision of judges was announced at 5:30 am according to Indian standard time on Friday more than 10 hours after Lee the sprawling conglomerate leader had left the court. While Samsung and Lee have denied wrongdoing in the case.
The Samsung Group said in a brief statement after Lee’s arrest , “We will do our best to ensure that the truth is revealed in future court proceedings,” while a spokeswoman from Samsung Group said No decision had been made yet on whether Lee’s arrest would be contested or whether bail would be sought or not.
As the prosecutors this week brought additional accusations against him for his custody because the same court had rejected a request last month to arrest Lee. Prosecutors have up to 10 days to indict Lee although they seek an extension. After that court would be required to make its first ruling within three months. The prosecution also said it had secured additional evidence and brought more charges against Lee in the latest warrant request. Again on Saturday Prosecutors plan to question Lee.
After arrest a ruling judge said we will acknowledge the cause and necessity of this arrest later, citing the extra charges and evidence. Also the judges rejected the prosecution’s request to arrest Samsung Electronics president Park Sang jin. The court rejected the request to arrest Park, who also heads the Korea Equestrian Federation, saying it was not needed given his position, the boundary of his authority and his actual role.
While the Ratings agencies did not expect any impact on the flagship of company’s credit ratings, and said his arrest would accelerate improvements in management transparency and corporate governance. With the effect of this Shares in Samsung Electronics ended Friday down 0.42 percent in a flat wider market.
Samsung Electronics share opened down 1.2 percent, while Samsung C&T Corp shares, opened down 3.2 percent compared with the wider market’s drop of 0.45 percent, the de facto holding company of Samsung Group.
While Lee’s arrest is not expected to hamper day to day operation of Samsung Group because company is run by professional managers, experts. The only thing which get affected is the strategic decision making which previously made by South Korea’s biggest conglomerate.
A engineer at Samsung electronic declined to be identified said,” it would not make sense for a company of that size not to function properly just because the owner is away. There are more than 1000000 of employees like me working in Samsung electronics and its business would be as usual for all of us.
It’s not like Samsung’s business will grind in a halt state due to Lee’s arrest. There are many smart people at the company; former Samsung Electronics executive Kim Yong serk said who is now a professor at Sungkyunkwan University. He Also said,” Lee’s arrest would have an impact on long term investment decisions. Samsung Presidents are evaluated on annual basis so that they take bold decision for company future. Now company just needs a chairman for making a long term investment decision. “
Samsung Group is a key driver of Asia’s fourth largest economy now has been engaged in a restructuring process as it clears a succession path for Lee to assume control after his father, Lee Kun hee, death by a heart attack in 2014.
Lee’s arrest gives a boost to prosecutors in Samsung Group to build their case against President Park and her close friend Choi Soon sil, who is in detention and faces charges of abuse of power and fraud. But both park and choi have denied.
Prosecutors have focused their investigations on Samsung’s relationship with Park but the court decides whether to uphold her impeachment. They accused Samsung for playing a bribes amounting of 43 billion which is $37.74 million that organisation linked to choi to secure the merger of two Samsung units. Funding includes Samsung’s sponsorship of the equestrian career of Choi’s daughter, who is in Denmark and have been in a South Korean wanted list. If parliament’s impeachment is upheld by Court, Park will become South Korea’s first democratically elected leader to be forced from office early.
Park remained in office but stripped of her power while she waits for court’s decision. Kim sang jo shareholder activist and economics professor at Hansung University , who was questioned by prosecutors as witness , said ,” it’s a painful moment for Lee, but this will be an important opportunity for Samsung Group to sever ties with the past”