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Samsung Corporate Nerve Center Dismantled, Group Chief Charged With Bribery

Samsung Corporate Nerve Center Dismantled, Group Chief Charged With Bribery
As the Samsung Group announced the dismantling of its corporate strategy office, the latest developments in a graft scandal that has rocked the country, the South Korean prosecutors charged top conglomerate chief Jay Y. Lee with bribery and embezzlement on Tuesday.
Dealing a fresh blow to the standard-bearer for Asia's fourth-largest economy, Jay Y. Lee, 48, was arrested on Feb. 17 over his alleged role in the corruption scandal involving impeached President Park Geun-hye.
Lee, third-generation leader of the tech giant "chaebol", and four other executives were charged with bribery and embezzlement, the special prosecutor's office said on Tuesday, the last day of its investigation.
To cement his control of the smartphones-to-biopharmaceuticals business empire, Park's confidant, Choi Soon-sil, the woman at the center of the scandal, was pledged bribes to a company and organizations tied to her and this is the primary charge against Lee.
"We apologize for the social controversy and distress we have caused," Samsung Group Executive Vice President Lee June told reporters.
A Constitutional Court ruling on whether to uphold parliament's December impeachment of Park is expected and the charges came ahead of that.
Accusations that pressure big businesses, including Samsung, to donate to two foundations set up to back the president's policy initiatives was exerted by her in collusion with Choi was the triggering factor of that impeachment.
The power of the 65-year-old daughter of a former military strongman has been suspended. Park would become the country's first democratically elected president to be thrown out of office should it uphold the impeachment. The special prosecutors have classified her as a suspect even though e a sitting president cannot be indicted.
Specifics of the charges against Lee or other Samsung executives were not disclosed by them. There were no comments from the Samsung Group which has denied paying bribes to Park or seeking improper favors from her.
He could face up to 20 years in prison if convicted, based on the main charges levied against Lee.
Amid accusations by politicians that it was a key organ for illicit lobbying efforts, Lee in December promised to shut Samsung's corporate strategy office, a key nerve center responsible for major initiatives such as investment in new businesses.
The office did not exist as a legal entity but wielded enormous power as the instrument of control for the founding Lee family and is composed of around 200 employees hand-picked from various affiliates.
Their own course going forward would be set by the chief executives and boards of the various affiliates such as Samsung Electronics and Samsung C&T Corp, Samsung has said.

"It is a shock that Samsung completely dismantled the whole office, cutting the link between group affiliates as if it broke up a fleet," Chung Sun-sup, chief executive of corporate research firm, said.
"This is a significant change to South Korea's chaebol management style."
It had not yet decided how the conglomerate would deal with group-level issues such as coordination among affiliates, a Samsung Group spokeswoman said.

Christopher J. Mitchell

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