Lee Jae-yong, the vice chairman of Samsung, was indicted on charges of bribery and embezzlement on Tuesday. Lee is the most powerful South Korean business leader to be ensnared in the country’s longstanding corruption issues, which have reached the highest levels of the government, including President Park Geun-hye, who was impeached in December.

Lee, 48, is accused of giving a $38 million donation to Choi Soon-sil, an unofficial aide to Park who has been detained for months for funneling government funds to her private coffers. The special prosecutor that indicted Lee said in exchange for his donation, Park co-signed a highly controversial merger in 2015 that ultimately consolidated Lee’s hold on the company, and increased Samsung’s stock value by $758 million. Lee has been Samsung’s de facto leader since 2014, when his father suffered a heart attack.

“Samsung was directly linked to the influence-peddling scandal and was essential to the special prosecutor’s investigation,” said a spokesman for the special prosecutor that indicted Lee. “The indictment describes in detail the private conversation between Lee and President Park Geun-hye.”

South Korea’s economy is run by chaebols: family-run business conglomerates. In fact, the 10 largest chaebols account for 80 percent of the country’s GDP. Samsung is the largest chaebol; its products make up 20 percent of South Korea’s exports. For decades, chaebol leaders have been embroiled in corruption. Six of the top 10 chaebol leaders have been convicted of white-collar crimes, but have avoided jail time. 

Lee’s indictment comes at a moment of political tumult and a newfound hunger for cleaning up corruption in South Korea’s business and political worlds, which are often intertwined. Lee denies currying political favors with his donations to Choi. Four other Samsung executives were indicted on Tuesday; three of the four immediately resigned.

Lee is also being indicted on perjury charges, regarding a parliamentary hearing in December. At the hearing, Lee said he was unaware that Samsung’s donations ended up in Choi’s pockets. “President Park asked us to support the development of culture, sports and tourism,” Lee said at the hearing. “I wasn’t aware of Samsung’s payment to the two foundations, and I was only briefed after the fact.” The prosecutor apparently found evidence that Lee was fully cognizant of where his money was headed.

For the past few months, Samsung has been enmeshed in controversy. Last October, the company recalled two million Galaxy Note 7 phones, which had a tendency to burst into flames. And Park has been suspended since her December impeachment. Her case is being reviewed by the Constitutional Court, which will decide, likely in the next few weeks, whether to reinstate her or permanently remove her from power.

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

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Prosecutors in South Korea named Samsung Vice Chairman Lee Jae-yong as a suspect in a bribery investigation that has rocked the country’s business and political establishment over the past few months. Lee will respond to questions from prosecutors on Thursday. Lee faced public questioning before parliament in early December, a rare public rebuke in a country where a handful of corporate elites hold sway and, before the bribery scandal came to light, were rarely in the public eye.

The scandal surrounding Samsung, and other South Korean conglomerates, runs from the top of the nation’s government to its leading business leaders. President Park Geun-hye was impeached last month, because of her relationship with an unofficial and highly influential advisor, Choi Soon-sil. Choi, the daughter of a religious cult leader, is accused of embezzling millions of dollars through her influence over the president. She is currently in prison.

Samsung, along with other multi-billion dollar companies, donated millions of dollars to two of Choi’s foundations. Prosecutors are investigating whether the payments were made to curry political favor with Park. Eight of South Korea’s top family-run businesses have reportedly donated 70 billion won ($60 million) to two foundations run by Choi. In a hearing before parliament last month, the business leaders denied that the payments amounted to bribery.

“President Park asked us to support the development of culture, sports and tourism,” Lee said in the hearing, referring to the payments he made to Choi’s foundations. “I wasn’t aware of Samsung’s payment to the two foundations, and I was only briefed after the fact.”

Samsung’s heir apparent Lee Jae-yong to be questioned over #ParkGeunhye‘s scandal https://t.co/esbajlESSE pic.twitter.com/1fGzBxicGX

— China Xinhua News (@XHNews) January 11, 2017

The investigation aims to determine whether Samsung’s payments were made to help secure the president’s support for a polarizing merger in 2015. Lee has denied that claim. In November, prosecutors raided Samsung’s headquarters in Seoul, pursuing an investigation into $3 million Samsung gave to one of Choi’s foundations; money that went toward her daughter’s equestrian training in Germany. Lee called that payment a “mistake.”

Park, whose relationship with Choi saw millions of South Koreans flood the streets in protest, was impeached last month. Her powers have been suspended while the case is being reviewed in South Korea’s Constitutional Court, which will either reinstate the embattled president, or officially remove her from office.

The bribery investigation comes in the middle of a rocky couple of months for Samsung. In October, the company recalled nearly two million Galaxy Note 7 smartphones, after customers reported their phones overheated, burned them and, in some cases, exploded.

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

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The streets of Seoul were packed with thousands of protesters last weekend in the wake of a leaked email scandal concerning President Park Geun-hye. Park ordered ten members of her cabinet to step down because of their involvement in the scandal, and even Prime Minister Yoo Il-ho was pressured to step down, resulting in Yim Jong-yong being named the new finance minister and deputy prime minister.

The scandal stems from the interference of Choi Soon-sil, a longtime friend of President Park, in state affairs. Choi is the daughter of the cult leader Choi Tae-min, who was Park’s mentor until his assassination, and served as a close confidante for the President, allegedly having access to classified documents and important decision making procedures. There are even reports that Choi organized a secret cabinet of “eight fairies” who advised Park behind the scenes, despite not being elected officials or official presidential appointees.

Choi returned to Korea from Germany this week to cooperate with the investigation and was immediately placed under detention after prosecutors expressed fears that she might destroy evidence of her involvement. A tablet computer was found in her possession that showed evidence of her involvement in classified government affairs, including copies of speeches that President Park had yet to give. President Park acknowledged that she let Choi edit drafts of her speeches, which prompted an estimated 9,000 Koreans to march in protest, carrying signs reading “Who’s the Real President?” While editing speeches may not seem like a dramatic crime, Choi has been compared to Rasputin in Czarist Russia and those calling for Park’s resignation argue that Choi was attempting to interfere with the democratic process, molding the government to her own aims. Choi is accused of advising Park on political appointments and policy decisions, and using her influence to force corporations to donate to the foundations that she works with. As she was escorted into prosecutors’ offices this week, Choi stated on the record that she had “committed wrongs for which I deserve to die.”

South Korea’s constitution protects Park from criminal prosecution except in the case of treason or insurrection but that has not stopped calls for her resignation, especially from the younger population. Park’s presidential term will end in 2018 but with her ministers being forced out and her aides resigning, President Park may barely have a cabinet left to work with during the “lame duck” phase of her Presidency. With her reputation destroyed, Park will now most likely fail to push through the changes she had hoped to make to the economy. The protesters who rallied this weekend were doubtful that Park will face impeachment, as that process must be approved by the supreme court (which is staffed by presidential appointees), but hoped that her crumbling cabinet and rock bottom approval rankings will force her into resignation. And now, Park has had to give up her ability to select a new Prime Minister.

The vitriol expressed against President Park is eerily similar to that expressed against Secretary Clinton over her private email server. Both of their political careers have been so severely damaged by email scandals that they may never recover.

Jillian Sequeira

Jillian Sequeira was a member of the College of William and Mary Class of 2016, with a double major in Government and Italian. When she’s not blogging, she’s photographing graffiti around the world and worshiping at the altar of Elon Musk and all things Tesla. Contact Jillian at Staff@LawStreetMedia.com

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South Korea’s president walked to a meeting with the speaker of Parliament on Tuesday, streaming past opposition lawmakers who held yellow signs that read “step down.” President Park Geun-hye did not announce her resignation during the rare meeting, but she did take a step in placating the opposition by weakening her powers: Parliament will now choose her prime minister, rather than allowing her unilaterally chosen nominee to hold the largely ceremonial post.

“If the national assembly recommends a new prime minister, I will appoint him and let him control the cabinet,” Park told Chung Sye-kyun, the speaker of Parliament, and a top leader of the opposition Democratic Party.

Park is responding to concerns from everyday South Koreans and lawmakers, many of whom are calling on her to resign completely. The country erupted when news broke of a scandal involving Park and one of her longtime confidants and unofficial aides, Choi Soon-sil. Choi, the daughter of a controversial cult leader, is accused of using her connections to Park to embezzle millions of dollars into two personal foundations, as well as offering unqualified advice to the president. Choi, along with some of Park’s aides, have been arrested. Others are being investigated.

“The crisis facing the president is a crisis in state governance and a crisis of the nation as a whole, and thus people are very worried,” Chung said during the meeting, adding: “Therefore, what is most important is placating public concerns.”

Park moved to do that by allowing Parliament to choose her next prime minister. Last week, Park unilaterally chose a new prime minister, Kim Byong-joon. Lawmakers were upset that she filled the post without consulting them, so to quell the uproar, she is allowing the legislature to deliberate on the decision. In the meantime, Kim will remain the prime minister designate, but will likely withdraw if he is not the legislature’s chosen candidate.

With 15 months left in her term, some opposition lawmakers, and some members of her own party, would like Park to stay out of government completely. Others are calling for her to partake only in foreign policy matters, leaving domestic matters for Parliament and others in the cabinet, including the new prime minister.

Over the weekend, tens of thousands of people protested in Seoul, and more mass protests are planned for the coming weekend. Meanwhile, Park has the lowest approval rating–five percent–since South Korea democratized in 1987.

Alec Siegel

Alec Siegel is a staff writer at Law Street Media. When he’s not working at Law Street he’s either cooking a mediocre tofu dish or enjoying a run in the woods. His passions include: gooey chocolate chips, black coffee, mountains, the Animal Kingdom in general, and John Lennon. Baklava is his achilles heel. Contact Alec at ASiegel@LawStreetMedia.com.

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