Political crisis in South Korea buries Samsung

World - Mohit Shah - Jan 18,2017

Rating -

stars - based on 21 reviews

political crisis in south korea buries samsung

South Korea’s global technology manufacturer, Samsung, has been tied to the ongoing corruption scandal that also involves the nation’s president.

On Monday, special prosecutors had demanded an arrest warrant against Samsung’s heir-apparent, Lee Jae-yong. The prosecutors have opposed that, Mr. Lee had bribed President Park Geun-hye along with her closest confidant in return for political favors.

The charges have been imposed at a tough time for the firm, which was struggling in several of its core businesses while pushing to break from its past. Moreover, Samsung has been running without a chairman for the past two years, after Lee Kun-hee (father of Lee Jae-yong) suffered a heart attack.

The corruption scandal has hampered not only the company but also South Korea's relatively young democracy. Samsung, listed among the country's most important companies might be bruised, and the nation's leadership has been dropped into shambles.

According to speculations, Mr. Lee might not be arrested. The decision, however, will be declared this week.

Prosecutors revealed that Samsung made payments in exchange for an agreement by the government-controlled National Pension Service to back a contentious 2015 collaboration of Samsung affiliates. As per analysts, the merger helped Mr. Lee inherit the power of Samsung from his father.

Currently, Mr. Lee's role at Samsung is not necessarily compromised. South Korea holds a long history of pardoning leaders of its biggest family-run firms. Looking at Samsung's size, past efforts to fine the company or its officials have been met with risks related to the effect on South Korea's economy.

However, the company’s functioning would be disrupted due to this political crisis involving Mr. Lee. An analyst at Sanford C. Bernstein and Company, Mark Newman said that important issues that require Lee’s permission could be delayed due to the current distractions.