April 20, 2024

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[THE INVESTOR] Expectations rose on Feb. 15 that Lee Boo-jin, the eldest daughter of the Samsung family, could fill a possible power vacuum that would be created if the special counsel team’s second request to arrest Samsung heir apparent Lee Jae-yong is accepted by the court.

As market watchers saw the possibility of Lee Boo-jin’s role being strengthened at the No. 1 family-run conglomerate in South Korea, shares of Hotel Shilla -- which she runs -- continued rallying for the fourth trading day in a row, from around 42,000 won (US$36.80) to 47,000 won.

After Park Young-soo’s special counsel team applied again with the court for an arrest request for the eldest son of Samsung Chairman Lee Kun-hee late Feb. 13, Hotel Shilla’s shares jumped 3.8 percent to hit 47,350 won on Wednesday. 

On the other hand, Samsung Electronics, led by Vice Chairman Lee Jae-yong, has been sliding for the past week, from around 1.97 million won to 1.88 million won. It slightly rebounded Feb. 15, closing at 1,886,000 won.

Investors have paid close attention to testimony by Park Won-oh, a former executive at the Korea Equestrian Federation and a close associate of President Park Geun-hye’s confidante Choi Soon-sil. He had reportedly claimed Lee Boo-jin has more support from her mother Hong Ra-hee, director of the Leeum Samsung Museum of Art, than her older brother in terms of succession, according to news reports.

The 47-year-old second daughter is said to resemble her father the most in character and management style among the three children. 

The special counsel has sought to arrest Lee Jae-yong with what they contend is based on a more comprehensive investigation into suspicions of his bribery connections to President Park and Choi, pushing Samsung into a state of high alert over the possibility of an arrest warrant issuance and physical detention.

Samsung released a brief statement on the matter on Feb. 14 night.

“Samsung has never bribed the president wishing for a price or asked for an unfair favor,” the statement said. “(Samsung) will do its best to reveal the truth in court.”

Samsung’s Future Strategy Office is reportedly preparing measures against newly added accusations in the warrant, including ones that the presidential office exerted power over the Fair Trade Commission to help Samsung comply with the nation’s cross-shareholding regulation in 2015 and on the Financial Services Commission to revise regulations on stock listing for Samsung BioLogics last November.

The Seoul Central District Court is scheduled to review the arrest request at 10 a.m. on Feb. 16.

The business community has remained tense about the impact of the possible arrest of the Samsung heir on other conglomerates involved in the ongoing bribery scandal. If Lee is arrested, the fallout could reach SK Chairman Chey Tae-won and Lotte Chairman Shin Dong-bin.

However, many are betting on a scenario where the Seoul court rejects the warrant for Lee while issuing one for Samsung Electronics President Park Sang-jin, who headed the Korea Equestrian Federation and allegedly had closer connections with Choi.

“Although it is yet unpredictable whether the court would issue an arrest warrant for Lee, it is highly likely that Park would be issued one,” said an industrial source. “Samsung would be expecting this scenario, which is a good defense.” 

By Song Su-hyun/The Korea Herald (song@heraldcorp.com)