Samsung family succession hits snag with chief's arrest

South Korea was taken by surprise Friday with the arrest of the scion of the country's richest family and de-facto leader at Samsung over his alleged involvement in a massive corruption scandal that engulfed the president and riveted the nation.

Prosecutors believe Lee Jae-yong, 48, a vice chairman at Samsung Electronics and the only son of the ailing Samsung chairman, gave bribes worth $36 million to President Park Geun-hye and her close friend to help win government support for a smooth company leadership transition, including a contentious merger of two Samsung companies.

A look at how his arrest affects the electronics giant:

LITTLE IMPACT ON PHONE, TV BUSINESSES

Some conservative commentators are worried that Lee's arrest could hurt Samsung's businesses and therefore the economy, which relies on such companies for exports and jobs.

But others dismiss such concern as exaggerated. "What would affect its businesses are the Galaxy phone's success, the performance of the semiconductor sector and how fast Chinese rivals are catching up, not whether Lee Jae-yong is arrested or not," said Park Sang-in, a professor at Seoul National University.

Chiefs of companies such as Hyundai Motor Group and SK Group have been jailed before but still ran their companies from behind bars.

Samsung Electronics, which is the world's largest maker of mobile phones, TVs and computer memory chips, has three separate chief executive officers each overseeing its electronic component, mobile phone and television divisions.

But long-term business decisions, such as appointing executives and deciding on mergers and acquisitions, may be put on hold. Samsung normally announces personnel reshuffling and promotions each December, but postponed those announcements in 2016 as it was dragged deeper into the political scandal.

Lee is not the first in his family to face criminal charges. His father was convicted in 2008 and 2009 for embezzlement and tax evasion related to business dealings designed to pass down wealth to his son. Lee Kun-hee, the ailing chairman, stepped away from his role at the company when prosecutors indicted him in 2008. The younger Lee will likely follow a similar course and stay away from leadership role once investigators formally bring charges against him.



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