LDN - Business

Samsung chief appears for second round of questions in graft probe

[February 13, 2017] By Se Young Lee and Ju-min Park

SEOUL (Reuters) - Samsung Group leader Jay Y. Lee appeared at the South Korean special prosecutor's office for questioning on Monday as part of a wider investigation into an influence-peddling scandal that could topple President Park Geun-hye.

The special prosecutor has focused on South Korea's biggest conglomerate, accusing Lee in his capacity as Samsung chief of pledging 43 billion won ($37.31 million) to a business and organizations backed by Park's friend, Choi Soon-sil, in exchange for support for a 2015 merger of two Samsung companies.

The funding included sponsorship for the equestrian career of Choi's daughter, who is under arrest in Denmark after being sought by South Korean authorities.

Park, Lee, Choi, and Samsung Group [SAGR.UL] have all denied bribery accusations.

Proving illicit dealings between Park or her confidantes and Samsung Group is critical for the special prosecutor's case that ultimately targets Park, analysts have said.

Park was impeached by parliament in December and South Korea's Constitutional Court will decide whether to uphold that decision. She has been stripped of her powers in the meantime.

Lee arrived at the prosecution office in southern Seoul early on Monday in a black sedan, dressed in a dark blue suit and tie and flanked by Samsung Group officials and his lawyer.

"I will once again tell the truth to the special prosecution," Samsung Group's third-generation leader told reporters before entering an elevator. He gave no details.

Outside the prosecutor's office, protesters held up signs calling for his arrest.

EXECUTIVES QUESTIONED

The special prosecution team said investigators were questioning two other Samsung executives as suspects. Both are officers of the Korea Equestrian Federation and have been questioned previously in the case.

One of those two, Samsung Electronics Co Ltd president Park Sang-jin, did not respond to reporters on his arrival at the special prosecution team's office.

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Lee Jae-yong (C), 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 on February 13, 2017. REUTERS/Jung Yeon-Je/Pool

Lee Kyu-chul, spokesman for the special prosecution office, told a news briefing the office would decide soon whether to make a second arrest warrant request for the Samsung Group chief. He did not comment on other details, including what Jay Y. Lee, 48, during Monday's questioning.

Spokesman Lee said prosecutors would also consider whether to seek arrest warrants for four other Samsung Group executives identified as suspects. The prosecutor's office had previously said it would not seek arrests for any Samsung executives other than Jay Y. Lee.

In January, the special prosecution sought a warrant to arrest Samsung chief Lee after questioning him for more than 22 hours, accusing him of paying bribes to win the state pension fund's support for the controversial merger of Samsung C&T Corp and Cheil Industries Inc.

However, a Seoul court rejected that request.

Chang Choong-ki, deputy head of Samsung Group's corporate strategy office, known informally as its "control tower", was also questioned as a suspect on Sunday and returned home hours later.

Shares in Samsung Electronics were down 0.9 percent by 0600 GMT on Monday, compared with a flat wider market.

"The issue will have limited impact on share prices, except if the worst-case scenario happens, since political issues previously did not have a big influence on share prices or earnings," said Bae Sung-young, a stock analyst at Hyundai Securities.

(Reporting by Se Young Lee and Ju-min Park, additional reporting by Dahee Kim,; Editing by Tony Munroe and Paul Tait)

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