Samsung vows normal operation despite arrest

Lee Jae-yong (centre) vice chairman of Samsung Electronics arrives to be questioned as a suspect in a corruption scandal that led to the impeachment of President Park Geun-Hye, at the office of the independent counsel in Seoul.
PHOTO: Reuters

Samsung Electronics Vice Chairman Lee Jae-yong appeared for the second day of questioning by a special counsel team Sunday, two days after his arrest made headlines here and abroad, with the conglomerate vowing business as usual despite the leadership vacuum.

The special prosecutors investigating the Choi Soon-sil scandal are expected to continue questioning Lee until Feb. 28, when the team's term is due to end.

The team reportedly focused on the allegations that Lee gave some 43 billion won (S$53 million) worth of bribes to Choi, President Park Geun-hye's friend, in return for the government's support in a controversial merger of two Samsung affiliates in 2015.

Read also: Samsung heir arrested in corruption probe

Meanwhile, with their de facto leader detained, the management of Samsung remains on high alert. The company said its day-to-day operations will be run by professional managers.

"Daily operations of Samsung Electronics and its affiliates will not be affected by the arrest because they are run by professional CEOs" said a spokesperson at Samsung's future strategy office, which is serving as a control tower for the group. The office was on duty over the weekend.

Read also: After night in cell, Samsung scion taken for questioning

On the strategy front, Samsung, as scheduled, plans to deal with antitrust authorities in the US, the EU, China and Korea to gain approval for an $8 billion merger with US parts supplier Harman Industries, which the group has been publicly pushing since November. On Friday, Harman's shareholders voted to approve the merger at a shareholders meeting in Stamford, Connecticut.

On the business front, the tech firm will unveil its new smartphone Galaxy Tab S3 alongside a teaser image of the Galaxy S8 at the Mobile World Congress, which kicks off Sunday in Spain. The firm's flagship smartphone Galaxy S8 will also be unveiled on March 29 as planned.

The company will also continue to review the establishment of a home appliance factory in the US, as it is under growing pressure from President Trump to make more investment in the country. It is reportedly reviewing investment incentives and geographical conditions in Alabama and South Carolina.

Samsung Electronics' stock price went down slightly Friday when its heir apparent was taken into custody, but experts said the arrest would not significantly impact the company's stock price in the future.

"The arrest of Lee is not likely to significantly affect the company's share price because a stock price is based on the company's fundamentals and the market trend," said Song Myeong-seob, an analyst at HI Investment & Securities.

"Rather than the issue involving Lee, the global chip market and the launch of the Galaxy S8 will affect the company's second-quarter earnings," Song added.

However, Lee's prolonged absence would affect the company's future strategy decisions, including those related to mergers and acquisitions and building its overseas network.

"He was scheduled to attend the Boao Forum for Asia in March. Now, it is uncertain whether he can build a network with Asian counterparts there," a Samsung official said.

More about