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Samsung Electronics Vice Chairman Lee Jae-yong leaves the Special Prosecutor’s office in Seoul’s Gangnam district after 15 hours of questioning on Feb. 14. (Yonhap News)

The investigative team of Special Prosecutor Park Young-soo submitted a second request on Feb. 14 for an arrest warrant against Samsung Electronics Vice Chairman Lee Jae-yong.

The new request includes charges of siphoning assets overseas and concealing illegal gains. It comes 26 days after the first request was rejected on Jan. 19.

The new charges bring the total against Lee to five, including existing ones related to bribery. The investigative team also requested an arrest warrant for Samsung Electronics president Park Sang-jin, who traveled to Germany on Lee’s orders to discuss equestrian training support for Jung Yu-ra with her mother Choi Sun-sil.

The new charges applied by the investigative team include overseas asset flight, which is a violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, and violation of the Act on the Regulation and Punishment of Concealment of Gains from Crimes. The investigative team’s charges stem from alleged issues in process of Lee transferring 8 billion won (US$7 million) between September and October 2015 to Core Sports, a German company owned by Choi and Jung. While current laws require the submission to documents to banks when making overseas remittances of US$20,000 or more at one time or US$50,000 or more in a year, Samsung did not make the necessary reports.

The investigative team also charged Lee with concealment of criminal gains in connection with support to Jung through a bogus Aug. 2015 consulting contract with Core Sports worth over 22 billion won (US$19.2 million), as well as another bogus consulting contract with the horse brokerage Helgstrand to conceal the purchase of two new horses for Jung after the Choi government interference scandal first broke in Sep. 2016. The investigative team’s conclusion is that Samsung signed the false contracts to conceal the payment of bribes to Choi. The new request also included the same charges from the initial one, including bribe offering, embezzlement according to the Aggravated Punishment Act, and violation of the Act on Testimony, Appraisal, etc. before the National Assembly.

The amounts cited in the special prosecutor’s charges - 43.3 billion won (US$37.8 million) in bribes and 9.6 billion won (US$8.4 million) in embezzled funds - were identical to those mentioned in the first request. For Park’s arrest warrant request, only charges related to support for Jung’s equestrian training were included. In Park’s case, the Core Sports contract amount of 21.3 billion won (US$18.6 million) was listed as a bribe payment, and the 8 billion won of that actually wired to Core Sports as embezzled funds. Questioning of Lee for a review of the warrant‘s validity prior to arrest is to take place at 10:30 am on Feb. 16 at Seoul Central District Court under warrant judge Han Jeong-seok.

The focus of the investigative team’s attention in the alleged bribery between Lee and Park is on the motive for Lee’s actions. The investigative investigative team has placed the starting point at May 2014, when Samsung Electronics chairman Lee Kun-hee, 75, was incapacitated by a heart attack. It was in the wake of this that son Lee Jae-yong had to proceed through the stages of taking over management rights - which meant he urgently needed Park’s comprehensive support. The investigative team‘s conclusion is that Lee felt the need to make a request of Park, which suited the latter’s interests in conspiring with the 61-year-old Choi (currently under detention and indictment) to acquire money from major corporations.

It’s also a conclusion that explains why the investigative team’s list of charges on the warrant request against Lee included follow-up procedures for the Samsung C&T/Cheil Industries merger - including the removal of circular shareholding links and introduction of an intermediate financial holding company - as falling in the scope of special treatment received by Lee from Park in exchange for financial support.

The investigative team has verified several pieces of evidence suggesting that tens of billions of won provided to Choi by the Samsung Group were likely compensation for requests to Park to resolve issues related to Lee’s management succession. The period between Oct. 2015 and Oct. 16 when Lee provided 20.4 billion won (US$17.8 million) in affiliate funds to Choi’s Mir and K-Sports Foundations and signed a contract for 21.3 billion won in support for 21-year-old Jung’s equestrian training costs in Germany coincided with the post-merger follow-up efforts to pave the way for Lee’s succession.

In connection with this, the investigative team has also identified evidence to indicate that former Blue House Senior Secretary to the President for Policy Coordination Ahn Jong-beom, 58, and First Vice Minister of Strategy and Planning and former Blue House Secretary for Economic and Financial Affairs Choi Sang-mok, 54 - acting on orders from Park - applied pressure on the Fair Trade Commission and Financial Services Commission to see to Samsung‘s interests over a period from late 2015 to early 2016. Ahn is currently under detention and indictment.

The investigative team’s conclusion is that Lee‘s support for Jung’s equestrian training in Germany cannot be viewed as “normal.” Between Sep. 2015 and mid-2016, Lee wired a total of over 7.6 billion won (US$6.6 million) to Jung. In light of the large amount over a short time and evidence that Lee moved more actively to support Jung, the payments are seen as being connected with illicit requests rather than intended purely as assistance. Park Sang-jin also visited Germany on three occasions in September and October 2016, when the first reports of the Choi scandal were being reported, to hold secret discussions on providing support for Jung through a new contractual arrangement.

The reasons for the investigative team requesting a warrant against Park Sang-jin - who oversaw practical duties related to support for Jung‘s equestrian training in Germany - as an accomplice to Lee’s alleged bribery are twofold.

The first is clear circumstantial evidence that Park was involved in offering bribes on direct and indirect orders from Lee. Beginning in Jan. 2015, Park met periodically to discuss support for Jung with Second Minister of Culture, Sports and Tourism Kim Jong, who was ordered to provide the assistance by Park Geun-hye at Choi‘s request. Park Sang-jin is also the individual who personally received support for Choi and Jung in Germany on Lee’s orders around the time of the latter’s one-on-one meeting with Park Geun-hye on July 25, 2015. The investigative team also cited several false statements by Park Sang-jin, including his claim that he “did not find out about Choi’s existence until later,” as reasons necessitating arrest.

A second reason is an attempt to increase the likelihood of an arrest warrant against Lee also being issued. The investigative team is confident that it has confirmed enough facts about Park’s criminal actions related to the practical aspects of Jung’s support that it can get a warrant issued. Its calculation is that the court handling the pre-arrest suspect questioning for Lee and Park as accomplices in bribery will be hard-pressed to make different arrest rulings for the two men. With the investigative team‘s warrant request against Lee including of a whole host of areas related to the management succession as “rewards” for illicit requests, issuance of an arrest warrant for Park alone would create a strange situation in which he appears to be the prime mover in the Samsung group’s transition of management authority.

By Kim Jeong-pil and Seo Young-ji, staff reporters

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