Samsung Heir Named as Bribery Suspect in Influence-Peddling Investigation
Lee Jae-yong to be summoned for questioning Thursday
SEOUL—The third-generation heir of South Korea’s Samsung conglomerate will be questioned in relation to suspected bribery, prosecutors said, drawing the country’s biggest and most powerful business group deeper into an unfolding political scandal that has already led to the impeachment of the president.
Lee Jae-yong, the 48-year-old heir-apparent to the Samsung empire, will be summoned for questioning on Thursday morning by special prosecutors, a spokesman for the special prosecutors’ office said Wednesday.
The special prosecutors’ office also called on lawmakers to report Mr. Lee for allegedly lying under oath while testifying last month at a legislative hearing on the corruption scandal. Special prosecutors would then be able to investigate charges of perjury, according to Hong Jung-seok, a spokesperson for the special prosecutors.
A spokeswoman at Samsung declined to comment or make Mr. Lee available for comment.
The special prosecutors’ office was created by the National Assembly late last year after allegations of high-level corruption involving a longtime confidante of President Park Geun-hye and the country’s biggest conglomerates.
Prosecutors are looking into whether conglomerates such as Samsung, Hyundai and LG, which donated millions of dollars to two foundations allegedly controlled by Choi Soon-sil, Ms. Park’s friend, expected political favors in return. Ms. Choi is alleged to have exerted unusual control over government decisions from behind the scenes. She has denied wrongdoing.
Top executives at Hyundai and LG, at a legislative hearing, didn’t deny the contributions, but said that they had little choice but to give.
In Samsung’s case, prosecutors have raised questions about whether the government-backed National Pension Service, the world’s third-largest pension fund and the largest shareholder in many South Korean stocks, voted in favor of an $8 billion merger of two Samsung affiliates in 2015 in exchange for donations to Ms. Choi. The merger helped Mr. Lee solidify control over smartphone maker Samsung Electronics Co. Samsung declined to comment on the allegations.
Samsung topped the list of conglomerates that donated to Ms. Choi’s two foundations, contributing 20.4 billion Korean won ($17 million) in total.
Prosecutors also appeared to be looking at separate payments made by Samsung to other entities owned by Ms. Choi and her daughter Chung Yoo-ra, an equestrian-dressage athlete who won a gold medal in the 2014 Asian Games.
Ms. Choi, who is in custody, has denied wrongdoing, while a lawyer for Ms. Chung in Denmark, where she is being detained, has also denied wrongdoing. Ms. Chung said in an interview with Korean reporters in Denmark that she wasn’t aware of her mother’s affairs.
In 2015, three months after Samsung completed its closely watched merger over the objections of minority shareholders including U.S. hedge fund Elliott Management Corp., Samsung signed a deal with Core Sports International GmbH, a small sports-consulting company based in Dillenburg, Germany, about 60 miles north of Frankfurt, to train equestrian athletes.
A contract reviewed by The Wall Street Journal between Samsung and Core Sports, later renamed Widec Sports, shows Samsung agreed to provide about $18 million to train equestrian athletes to compete in the 2018 Asian Games and World Equestrian Games.
The company was owned by Ms. Choi and her daughter, according to Park Sung-kwan, a Frankfurt-based lawyer and former managing director of Core Sports who co-signed the contract with Samsung in 2015.
The contract also was signed by Park Sang-jin, a Samsung Electronics president who since 2015 has been head of the Korea Equestrian Federation, where Ms. Choi’s daughter is a registered athlete. Prosecutors raided the equestrian federation’s office in November last year.
During last month’s hearing, Mr. Lee, the Samsung heir, acknowledged that Samsung had paid Widec 3.7 billion won ($3.1 million), but said that he wasn’t aware of who Ms. Choi or her daughter were at the time.
Samsung also purchased a horse for Ms. Choi’s daughter, estimated to cost about 1 billion won, Mr. Lee testified.
Between September 2015 and February 2016, Samsung contributed 500 million won to the Korea Winter Sports Elite Center, according to a project proposal submitted by the sports center that was reviewed by the Journal. The sports center was run by Ms. Choi’s niece, Jang Si-ho, who testified at last month’s legislative hearing that creating the sports center was Ms. Choi’s idea.
The sports center didn’t respond to multiple calls seeking comment.
At last month’s legislative hearing, Mr. Lee denied that Samsung received favors in return for making any contributions. Mr. Lee further dismissed the notion that the controversial merger was carried out to increase his control over Samsung Electronics. “The merger between the two companies was not related to my succession, said Mr. Lee.
This is the first time Mr. Lee has been summoned by the special prosecutors’ team after government prosecutors questioned him in November last year. Earlier this week, prosecutors had summoned two of Mr. Lee’s top lieutenants, including G.S. Choi, one of Samsung’s longest-serving senior executives, for questioning.
Historically, the heads of South Korean conglomerates have enjoyed lenient treatment from the judicial system, in part because the conglomerates are a key pillar of the national economy. As public anger against the conglomerates has risen in recent years, however, convictions have become more common, though suspended sentences and presidential pardons mean few tycoons have had to spend time behind bars.
Mr. Lee’s father, second-generation chairman Lee Kun-hee, was convicted twice—in 1996 for bribing the president, and in 2008 for embezzlement and tax evasion. Each time, he was given suspended sentences and then pardoned by the president.