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With Samsung chief's arrest, three executives in spotlight

17 February 2017

SEOUL, Feb 15 South Korea's special prosecutor's office said on Wednesday it had expanded charges against Samsung Group chief Jay Y. Lee to include hiding the proceeds of a criminal act before it made a decision to seek a warrant for his arrest for a second time.

He was already being held at a detention centre after appearing in court Thursday as judges deliberated whether to issue an arrest warrant. Lee Jae-Yong, Samsung Electronics vice chairman, is accused of paying almost $40 million in bribes to Park's secret confidante to secure policy favours.

After the prosecutor's first attempt to arrest Lee was rejected by a court on January 19 due to lack of evidence, the billionaire heir was called in again for 15 hours of questioning on Monday as investigators sought more information.

An earlier attempt by prosecutors to arrest Lee, the heir to the Samsung Group, was rejected last month by a court that found insufficient evidence at that point to justify his arrest.

The investigation team has been examining any favors Lee might have bought as part of a wider corruption scandal that led to the impeachment of President Park Geun-hye in December.

Seoul Central District Court's decision is likely to shock the business world.

South Korea is trying to establish whether the 48-year-old de facto leader of Samsung instructed the financial support to Choi Soon-sil, nicknamed the "Female Rasputin", in exchange for the government's backing for a merger between two of the group's subsidiaries.

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Samsung was the single biggest donor to the foundations.

Samsung said in a statement Wednesday it had "not paid bribes nor made improper requests to the president seeking favours".

The investigators are also reportedly looking at whether South Korea's fair trade commission gave any favors to Samsung related to a complex cross shareholding structure that allows the Lee family to exert an outsized influence on Samsung Electronics and its dozens of affiliates, while holding a small stake.

A month after Samsung's vice chairman avoided arrest in connection with a South Korean bribery case, a court has approved a warrant for Jay Y. Lee's arrest.

With more than three decades at Samsung, Choi has been deeply involved in preparing a plan for Jay Y. Lee to assume control of the group from his father, who was incapacitated by a 2014 heart attack.

The merger in 2015 of Samsung C&T and Cheil Industries was opposed by many investors who said it wilfully undervalued the former unit's shares.

Samsung is South Korea's largest business group and its revenue is equivalent to about a fifth of the country's GDP.

With Samsung chief's arrest, three executives in spotlight