Park scandal hampers Samsung’s Lee succession plan

Samsung is getting sucked further into the vortex of South Korea’s influence-peddling scandal. Special prosecutors summoned Jay Y Lee, Samsung Electronics Vice Chairman, for questioning as a suspect in the bribery investigation. The scandal has already led to the impeachment of South Korea President Park Guen-hye.
The questioning of the two top guys at Samsung Group had given the inkling that Junior Lee would be the next to be questioned. The fact that he was identified as a suspect has come as a surprise.
The presidential scandal has roiled South Korea for months. Millions took to the streets to demand the ouster of President Park Geun-hye. South Korean authorities are looking into whether Samsung and other chaebol business groups made payments to entities controlled by Choi Soon-sil, a Park confidant, in exchange for political favours.
In the past, prosecutors used to look the other way in cases involving chaebols’ wrongdoings. But this scandal has opened a can of worms. It has exposed the tangled web of politics-business unhealthy ties. Special prosecutors are mainly after President Park, but in this case, to charge Park with bribery, they have to prove her connection with Samsung.
The prosecutors are investigating whether an $830,000 horse and millions in other payments were made to smooth succession at the top of the country’s largest company. The probe focuses on whether Samsung provided support to Choi in exchange for government help in Lee’s efforts to take control of the conglomerate. The prosecutors want to know the answer of whether Park exerted pressure on Korea’s national pension service to support the merger of two Samsung Group companies, which was opposed by some investors.
Lee and members of his family were the biggest beneficiaries of the merger of Samsung C&T and Cheil Industries. It helped Lee increase his control over Samsung Electronics without having to spend his money to buy its shares.
Samsung’s offices have been searched. The investigators have asked parliament to file a complaint against Lee for perjury during parliamentary testimony, without providing details.
The reports emerged that Samsung made $18 million contract with Choi’s company to bankroll her daughter’s equestrian training in Germany. Another $17 million were donated to two nonprofit foundations whose funds were allegedly for Choi’s personal use.
Prosecutors are set to grill Lee regarding why Samsung Group sent corporate funds to Choi Soon-sil, the jailed confidante, including buying costly horses for her daughter, who was on the national dressage team.
On the other hand, Samsung has continuously denied any wrongdoing and has portrayed itself as a victim in the scandal. The company declined further comment for this story. Choi has denied colluding with Park to extract money from businesses.
So far, Samsung business has weathered the political investigation as well as a crisis over its fire-prone Note 7 smartphones. Last week, the company reported its biggest operating profit in three years.
Last month, Lee told at public hearing that he was not aware of the decision to fund Choi’s daughter. He also denied that Samsung tried to win favours through the funds. But he has acknowledged that it was ‘inappropriate’ but ‘inevitable’ to send money to Choi. Samsung Group declined to comment when asked about the matter last week.
Once prosecutors finish questioning Lee, it is expected that they will determine whether to add more Samsung officials on a list of suspects.
The intensifying focus on Lee will greatly hamper his ability to succeed his father at the head of Samsung. If Lee ends up being prosecuted in the investigation, it would disrupt years of planning for him to take over from his father. It will make the Samsung’s succession plan impossible.