South Korea court to rule on arrest warrant for Samsung heir

Samsung heir Lee Jae-Yong arrives at court Monday in Seoul.[AFP / Jung Yeon-je]

The heir to South Korea's Samsung empire appeared in court Monday as judges deliberate on whether to detain him over a controversial merger of two business units seen as a key step to his succession.

Lee Jae-yong, vice chairman of Samsung Electronics, is already being re-tried on charges of bribery, embezzlement and other offences in connection with a corruption scandal that brought down former South Korean president Park Geun-hye.

Dressed in a dark suit and wearing a face mask due to the coronavirus, Lee appeared grim-faced as he entered the Seoul courthouse on Monday without answering questions from reporters.

Monday's proceedings are separate from his ongoing retrial, but add to the difficulties for the Samsung group, by far the biggest of the family-controlled conglomerates, or chaebols, that dominate business in the world's 12th-largest economy.

Prosecutors are seeking an arrest warrant for Lee on suspicion he was involved in price manipulation and illegal trading during the 2015 merger of Cheil Industries and Samsung C&T.

The transaction was seen as helping ensure a smooth third-generational power transfer to Lee, a scion of Samsung's founding family.

Chaebol families often have only a small ownership stake in their empires, but maintain control through complex webs of cross-shareholdings between units.

Lee was the largest shareholder in Cheil Industries, and critics say Samsung sought to artificially lower the price of C&T to give him a bigger stake in the merged entity -- a key part of the Samsung structure -- consolidating his grip on the conglomerate.

In a statement, the Samsung group rejected media reports of price manipulation as "groundless", adding Lee did not take part in "any illegal acts".

The prosecutors' request comes weeks after Lee issued a wide-ranging apology for company misconduct and promised to end the line of family succession.

Lee, 51, was jailed for five years in 2017 in connection with Park's corruption scandal, but was released a year later on appeal before the country's top court ordered him to face a new trial.

Samsung's overall turnover is equivalent to a fifth of the national gross domestic product, making it crucial to South Korea's economic health.

Samsung Electronics shares were down 0.35 percent in early morning trading in Seoul.