Samsung chief slips corruption charge

SOUTH KOREAN prosecutors have defended a controversial decision not to arrest the chairman of giant conglomerate Samsung on corruption charges, saying it would cause "too much disruption" to the faltering Korean economy.

Lee Kun-hee (66) was charged yesterday with breach of trust and evading taxes after one of Korea's largest corruption investigations, but cleared of allegations that he had bribed public officials from a $200 million (€126 million) slush fund.

In a move that angered Mr Lee's critics, however, prosecutors said he would remain free until his trial because of possible "negative repercussions" to Samsung, which employs three-quarters of a million people and makes almost a fifth of South Korea's exports.

Nine other executives in the company were also charged, but not arrested.

The four-month investigation into the financial life of one of Korea's richest entrepreneurs riveted the country and the indictment by prosecutor Cho Joon-woong was covered live on national TV.

"The charges involve an astronomical amount of money and are very serious crimes that deserve heavy punishment in court," said Mr Cho.

However, although the head of the country's largest conglomerate technically faces a life sentence on the tax-evasion charges, many commentators expect him to escape prison in a country where the courts often treat powerful businessmen with kid gloves.

In a sign that he anticipated such criticisms, Mr Cho said arrest was not an option because of fears it might damage the nation's interests. "We are not seeking detention, as the accused mostly admitted the charges and their absence from management may cause huge damage to the group and the nation's economy."

Korea's family-owned chaebol, or conglomerates, are widely credited with powering the nation into the economic superleague, despite regular charges of corruption and fraud.

Samsung later apologised "for causing concerns" and said it considered the investigation and indictments a "new starting point" for the firm.

In the two decades since he took over, Mr Lee steered Samsung from humble producer of cut-price electronics to one of the world's most successful high-tech companies, now rivalling troubled Japanese giant Sony in European and US markets. Forbes magazine lists his family as among the world's richest, with assets of more than $3 billion.

The prosecutors said that the company had a lot of "structural problems", a reference to the alleged hiding of assets and the transfer of millions of dollars to Mr Lee's children.

Last week, Mr Lee said he accepted "moral responsibility" for the problems at Samsung and hinted that he may quit his post.

Investigators probed allegations made by a former company lawyer that Mr Lee sold under-priced assets to his son Jae-yong in a secret attempt to transfer power in the company, and created the slush fund in the name of Samsung executives to bribe prosecutors, judges and journalists.

The whistleblower, Kim Yong-chul, also claimed that Mr Lee's wife, Hong Ra-hee, rifled the company slush fund of about $25 million for a spending spree on art.