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Samsung To Put Investments On Temporary Hold After Lee's Arrest

By February 17, 2017 at 6:12 am
Samsung's Lee Jae-yong indicted. (Photo : Getty Images)

South Korea's biggest conglomerate Samsung Group is expected to put on temporary hold most of its investment and new business plans, following the arrest of its de facto head Lee Jae-yong, according to market watchers Friday.

Lee, Samsung's vice chairman, was arrested on Friday over his alleged links to a corruption scandal that led to the impeachment of President Park Geun-hye, a South Korean court said. 

Lee, the group's third-generation leader, have denied any wrongdoing in the case.

After his arrest, the group is expected to stop its ongoing restructuring process that is said to strengthen

Lee's control over the group, according to market observers.

Also widely expected to be put on temporary suspension are the group's plans for mergers and acquisitions of other firms.

Lee was taken into custody at the Seoul Detention Center to await the court's decision after a closed-door hearing that concluded on Thursday evening.

Last month, the same court rejected the prosecutors' request to arrest Lee. On Tuesday, the prosecution requested once again requested for a warrant for Lee's arrest on bribery and other charges.

In the latest warrant request, the special prosecutor's office claimed it has new evidence and brought more charges against the 48-year-old Lee.

Prosecutors accused Samsung of paying 43 billion won in bribes to organizations linked to Choi Soon-sil, President Park's friend, in exchange of the government's support for a merger of two Samsung units.

Lee began filling the shoes for his father Lee Kun-hee, who was incapacitated by a heart attack in 2014. The elder Lee is now bed-ridden. 

Since taking over, the group's flagship Samsung Electronics Co. has acquired more than 15 foreign companies, including American firm Harman International in a US$8 billion deal.

Last year, Samsung's investments reached more than 27 trillion won, the largest in company history.
Industry watchers said that the acquisitions aimed at steering the company to a new business model under Lee's stewardship.

With Lee's absence, the group may face certain limits, according to Samsung officials.

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