South Korea crisis escalates as prosecutors to decide Samsung chief's fate

SEOUL: South Korea's special prosecutors' office said it will seek a warrant to arrest the head of Samsung Group, the country's biggest conglomerate, as a corruption scandal engulfing President Park Geun-hye escalated on Monday.

Samsung Group chief Jay Y. Lee was questioned for 22 straight hours last week as investigators probe a scandal that has reached the highest levels of power in South Korea.

The arrest warrant must be approved by a court, an official at Seoul central district court said. The date of the hearing has still to be confirmed, but it is likely to be Wednesday, the official said. Samsung did not have an immediate comment.

Prosecutors have been looking into whether Samsung's support for a business and foundations backed by Park's friend, Choi Soon-sil, may have been connected to the National Pension Service's 2015 decision to support a controversial $8 billion merger of two Samsung Group affiliates.



NPS chairman Moon Hyung-pyo was indicted on charges of abuse of power and giving false testimony on Monday, while Choi appeared before the Constitutional Court, denying wrongdoing.

Park remains in office but has been stripped of her powers while the Constitutional Court decides whether to make her the country's first democratically elected leader to be forced from office.

Moon was arrested in December after acknowledging ordering the world's third-largest pension fund to support the $8 billion merger in 2015 while he was head of the health ministry, which oversees the NPS.

Samsung has acknowledged providing funds to the three institutions but has repeatedly denied accusations of lobbying to push through the merger.

Choi is accused of colluding with Park to pressure big businesses, including Samsung, to contribute to non-profit foundations backing the president's initiatives.

NO ULTERIOR MOTIVES

Choi, in detention and on trial on charges of abuse of power and attempted fraud, again denied wrongdoing on Monday.

She said she had access to a former presidential aide's email address which had Blue House (presidential office) documents, but that she only looked at Park's speeches for "emotional expression".

Choi described Park as "a person without ulterior motives" who "does not allow people to take private interest or take private interest herself".



South Korea has been gripped by political crisis for months, with Park impeached in December. Park has also denied wrongdoing, though admitted carelessness in her relationship with Choi.

If the impeachment is upheld by the Constitutional Court, an election would be held in two months, with former UN Secretary General Ban Ki-moon expected to be a candidate.

Former opposition party leader Moon Jae-in maintained his lead in an opinion poll for presidential favorites, while Ban tightened the gap in second place, a Realmeter survey commissioned by the Maeil Business Newspaper showed on Monday.

The special prosecutors' office had said it would make a decision on Samsung's Lee on Sunday, but needed more time to deliberate all factors, including the potential economic impact.

The drama doesn't seem to have put off investors. South Korea rang in the new year with Asia's first sovereign bond, pricing the $1 billion, 10-year issue well below the initially indicated yield as global investors rushed to buy.

The won KRW and shares fell on Monday, but domestic politics weren't seen as a major factor.