January 15, 2017 / 5:01 AM / in 9 months

South Korea prosecutor weighs economic impact of arrest of Samsung chief

Jay Y. Lee, center, vice chairman of Samsung Electronics, arrives to be questioned as a suspect in bribery case in the influence-peddling scandal that led to the president's impeachment at the office of the independent counsel in Seoul, South Korea, Thursday, Jan. 12, 2017. REUTERS/Ahn Young-joon/Pool

SEOUL (Reuters) - South Korea’s special prosecutor said on Sunday it will take into account the economic impact of whether to arrest Samsung Group [SAGR.UL] leader Jay Y. Lee in connection with an influence-peddling investigation involving the president.

The office also delayed by one day, until Monday, its decision on whether to seek the arrest of Lee, the third-generation leader of South Korea’s largest conglomerate, or chaebol, citing the gravity of the case.

The special prosecution had said it would make a decision on Lee by Sunday. But spokesman Lee Kyu-chul told reporters on Sunday investigators were deliberating all factors including the potential economic impact of the arrest of Jay Y. Lee.

Prosecutors have been investigating whether Samsung provided 30 billion won ($25.46 million) to a business and foundations backed by President Park Geun-hye’s friend, Choi Soon-sil, in exchange for the national pension fund’s support for a 2015 merger of two Samsung affiliates.

The Samsung chief denied bribery accusations during a parliamentary hearing in December.

Taking into account the economic impact could prove beneficial to the 48-year-old Lee. The imposition of less severe punishment on erring business leaders to avoid negative economic consequences has precedent in South Korea.

“Law and principle are the most important metric, and after also considering various factors mentioned previously, we will decide by law and principle,” the prosecution spokesman Lee said, referring to economic impact, without elaborating.

A Samsung Group spokeswoman declined to comment.

Samsung’s Lee was questioned for 22 hours before leaving the special prosecutors’ office in Seoul on Friday morning as part of the investigation into a corruption scandal that has led to President Park’s impeachment by parliament.

Establishing a money-for-favor exchange between Samsung and Park or her surrogate is critical for the special prosecutor’s investigation, analysts say.

COURT DELIBERATING

Park, the daughter of a military ruler, has denied wrongdoing, although she has apologized for exercising poor judgment. Her friend, Choi, who is in detention and facing her own trial, has also denied wrongdoing.

The Constitutional Court is deciding whether to uphold or overturn the impeachment vote.

If Park is forced to leave office, a presidential election would be held in 60 days. Among the expected contenders is former U.N. Secretary-General Ban Ki-moon.

The chiefs of South Korean chaebol have over the years had prison sentences shortened or forgiven, or received pardons, with the economic impact of imprisonment cited as a factor.

Jay Y. Lee’s father Lee Kun-hee, who has been incapacitated since a 2014 heart attack, was handed a three-year suspended jail sentence in 2009 for tax evasion. He was later pardoned.

Samsung has acknowledged making contributions to the two foundations as well as a consulting firm controlled by Choi but has repeatedly denied accusations of lobbying to push through the merger of Samsung C&T and Cheil Industries Inc.

The world’s biggest maker of smartphones, memory chips and flat-screen televisions has delayed its annual executive promotions, which typically take place in early December, amid the scandal.

The special prosecution also said it plans to indict early next week National Pension Service chief Moon Hyung-pyo, who was arrested in December after acknowledging he pressured the fund to approve the merger while he was health minister.

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

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