February 14, 2017 / 6:05 AM / 5 months ago

South Korean prosecution again seeks arrest of Samsung chief

FILE PHOTO - Samsung Group chief, Jay Y. Lee, leaves after attending a court hearing to review a detention warrant request against him at the Seoul Central District Court in Seoul, South Korea, January 18, 2017.Kim Hong-Ji/File Photo

SEOUL (Reuters) - South Korea's special prosecutor's office said on Tuesday it would again seek a warrant to arrest Samsung Group [SAGR.UL] chief Jay Y. Lee, a suspect in a graft investigation that may topple President Park Geun-hye.

Lee, the third-generation leader of the country's top conglomerate, was questioned for more than 15 hours by the special prosecutor's office on Monday. The prosecutor is also seeking the arrest of Samsung Electronics Co Ltd (005930.KS) executive Park Sang-jin.

"We have filed for an arrest warrant for Vice Chairman Lee Jae-yong and President Park Sang-jin today," the prosecution office said in a statement, referring to the 48-year-old Samsung Group chief by his Korean name.

Last month, the Seoul Central District Court rejected the prosecution's first request for a warrant to arrest the Samsung chief.

If Lee is arrested it would deal a serious blow to Samsung, the world's biggest maker of smartphones, memory chips and flat-screen televisions, potentially hampering strategic decision-making such as new investments and acquisitions.

The prosecution office said the charges the two executives would face included bribery, embezzlement and hiding assets overseas. The prosecution also said it would also bring an additional charge of perjury against for Lee in the latest arrest warrant request.

The office declined to elaborate, saying it would give a briefing on the details on Wednesday.

Lee and the Samsung Group have denied wrongdoing.

The Samsung Group on Tuesday declined to make either executive available but issued a statement denying bribery.

"Samsung has absolutely never bribed the president seeking something in return or sought illicit favours," Samsung Group said in a statement.

"We will do our best for the truth to be revealed in court."

The Seoul court said it would hold a hearing on the arrest warrants request at 10:30 a.m. (0130 GMT) on Thursday.

The head of corporate analysis firm CEO Score, Park Ju-gun, said if Lee was arrested it would affect some long-term operating decisions as well as his plans to consolidate management control of the group.

But the impact on Samsung firms' near-term earnings would be limited because they are run by professional managers.

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In its unsuccessful attempt last month to arrest Lee, the special prosecutor accused Lee of pledging payments to a company and organisations backed by Park's confidant, Choi Soon-sil, to win support for a 2015 merger of two Samsung affiliates. [L4N1FY068]

Park was impeached by parliament in December after accusations that she colluded with Choi to pressure big businesses to donate to two foundations set up to back the president’s policy initiatives.

Both women deny wrongdoing

Park, 65, and the daughter of a former military ruler, remains in office but has been stripped of her powers while the Constitutional Court decides whether to uphold the impeachment.

If the Constitutional Court rules to uphold the impeachment vote, Park would be South Korea's first elected leader to be forced from office and a presidential election would be held.

The special prosecutor has focused on Samsung Group's relationship with Park, previously accusing Lee in his capacity as Samsung chief of pledging 43 billion won (30 million pounds) to win support for the 2015 merger of Samsung C&T Corp and Cheil Industries Inc.

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

Earlier on Tuesday, special prosecutor's spokesman Lee Kyu-chul told reporters the office had told parliament it needed to prolong its investigation. The office can seek a 30-day extension to its current deadline of Feb. 28.

The office of acting president Hwang Kyo-ahn, who must sign off on any such extension, could not be immediately reached for comment.

Reporting by Se Young Lee and Ju-min Park; Editing by Robert Birsel and Tony Munroe

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