S Korea court rejects arrest warrant for Samsung heir Park Chan-Kyong

Seoul - A South Korean court on Thursday refused to authorise the arrest of the heir to the Samsung business empire, in a setback to prosecutors probing a corruption scandal engulfing President Park Geun-Hye.

Officials on Monday sought the arrest of Lee Jae-Yong on charges of bribery, embezzlement and perjury, sending shock waves through the group, which is a major part of the South Korean economy and includes the world's largest smartphone maker.

It is already reeling from the debacle over the recall of its flagship Galaxy Note 7 device and reports have suggested it could face sanctions from overseas authorities if Lee is punished.

Lee, who became Samsung's de facto head after his father suffered a heart attack in 2014, is accused of bribing Choi Soon-Sil, Park's secret confidante at the centre of the scandal, and receiving policy favours from Park in return.

But the court rejected the request on grounds of insufficient evidence, which could mar investigators' plan to question Park - impeached by parliament last month - on charges of bribery.

Choi accused of interfering in state affairs using relationship with President

  • The woman at the centre of a corruption scandal that triggered the biggest political crisis for a generation in South Korea appeared in court Monday for a preliminary hearing in her trial on fraud charges.
  • It was the first public appearance since October for Choi Soon-Sil, who has been dubbed Korea’s “female Rasputin” for the influence she wielded over the now-impeached president, Park Geun-Hye.
  • Sporting black-rimmed glasses and a surgical mask that obscured her face, Choi, who has been in custody for the past seven weeks, was brought to the Seoul Central District Court in a special prison bus.
  • Television footage showed her handcuffed and wearing a blue-grey prison outfit with a serial number on the chest as she was taken off the bus and led into the court building by a female guard.
  • The 60-year-old faces trial on charges of embezzlement and abuse of power – largely related to huge “donations” made by conglomerates to two dubious foundations she controlled and allegedly plundered.
  • A long-time friend of Park’s, Choi is accused of using her leverage with the president to strong-arm the companies into handing over tens of millions of dollars.
  • Accusations that Park colluded with Choi formed the basis of an impeachment motion against the president that was passed by parliament earlier this month.
  • The motion is now being considered by the Constitutional Court which has up to 180 days to make a ruling on whether to endorse or reject the president’s ouster.
  • The last time Choi was seen in public was in late October when she attended a summons at the Seoul prosecutor’s office and famously lost a much-photographed Prada shoe in the media scrum outside the building.
  • Choi was not obliged to turn up for Monday’s hearing, which was largely procedural and focused on preparing the way for the trial proper.
  • “She has expressed a willingness to participate sincerely in the trial,” Lee was quoted as saying by the Yonhap news agency.
  • But her lawyer, Lee Kyung-Jae, said she had volunteered to appear.
  • Choi was criticised for refusing to attend the hearings of a parliamentary committee investigating the scandal.
  • Park is also accused of ordering aides to leak confidential state documents to Choi, who has no official title or security clearance, and allowing her to meddle in some state affairs, including the appointment of top officials.
  • Choi Soon-sil, accused of interfering in state affairs using her relationship with President Park Geun-hye, arrived at the Supreme Prosecutors' Office building in Seoul on Monday to face questioning over her alleged influence peddling.
  • Choi, a longtime confidante and shaman-like adviser to Park, had returned to Seoul on Sunday from Europe, capping a week of turmoil that led to a massive anti-government rally over the weekend.
  • Choi, a private citizen with no position in making policy, will be investigated over allegations of taking advantage of her political ties with President Park and coercing conglomerates to donate money to two foundations she controls.
  • She is also accused of seeking academic favors from professors at Ewha Womans University for her daughter Chung Yoo-ra.

A spokesman for the prosecution team described the decision as "very regrettable" but said they will "carry on with our probe without wavering".

Opposition politicians and analysts questioned the decision.

Seoul mayor Park Won-Soon, who is expected to stand for president later this year, accused the court of basing its decision on the potential economic ramifications rather than justice.

"A fair ruling is a requirement for economic improvement," he said on Facebook.

"A country that tolerates corruption cannot do well economically." Samsung is South Korea's largest business group and its revenue is equivalent to about a fifth of the country's GDP.

Kim Nam-Geun, a Seoul lawyer and a political commentator, added: "A court usually approves arrest warrants over bribery cases involving such an enormous amount of money and circumstantial evidence."

As well as the investigation of Park, the decision could weaken prosecutors' probes into the heads of other conglomerates implicated in the scandal, said Choi Chang-Ryol, a professor of politics at Yongin University.

"It would be far easier for prosecutors to quiz Lee if they have him under detention, and eventually build a bribery case against Park as well," he said.

Lee, 48, was seen early Thursday leaving a detention centre where he had awaited the decision for the previous 18 hours, following a hearing by the court.

Investigators said Lee gave or promised some 43 billion won ($36.3 million) worth of bribes to Choi, allegedly in return for the state pension fund's backing of a merger of two Samsung affiliates - deemed crucial for Lee's hereditary succession at Samsung.

Lee and his lawyers have claimed Park pressured the group into making donations, but that it did not expect special favours in return for the funds.

In a statement released by the prosecutors, the court said it was "difficult to accept the reasons, need and justification" for his arrest.

"We appreciate the fact that the merits of this case can now be determined without the need for detention," Samsung said in a statement on Thursday.

Choi is accused of using her presidential ties to force top local firms into donating nearly $70 million to two non-profit foundations controlled by her.

Samsung is the single biggest contributor to the foundations and separately paid Choi millions of euros, allegedly to bankroll her daughter's equestrian training in Germany.

Prosecutors have been probing whether Samsung's payments were aimed at securing government approval for the controversial merger of Cheil Industries and Samsung C&T in 2015.

It was opposed by many investors who said it wilfully undervalued Samsung C&T's shares. But it was backed by the National Pension Service, a major Samsung shareholder.

Park, accused of colluding with Choi to extract money from the firms and letting her friend meddle in a wide range of state affairs, was impeached by parliament last month.

Both Park and Choi, who is on trial for coercion and abuse of power, have denied any wrongdoing as the Constitutional Court is reviewing the validity of the impeachment.

If the court upholds the impeachment, a presidential vote will be held in 60 days, with Park immediately losing executive privilege that protects her from criminal indictment.