April 19, 2024

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[THE INVESTOR] Samsung Electronics Vice Chairman Lee Jae-yong appeared for a second day of questioning by the special counsel on Feb. 19, two days after his arrest made headlines here and abroad, with the conglomerate on high alert over the weekend.

The special prosecutors investigating the Choi Soon-sil scandal are expected to continue questioning Lee until Feb. 28, when the team’s term is due to end.

The team reportedly focused on the allegations that Lee gave some 43 billion won (US$36.3 million) worth of bribes to Choi, President Park Geun-hye’s friend, in return for the government’s support in a controversial merger of two Samsung affiliates in 2015.

Meanwhile, with their de facto leader detained, the management of Samsung remains on high alert. The company said its day-to-day operations will be run by professional managers.

“Daily operations of Samsung Electronics and its affiliates will not be affected by the arrest because they are run by professional CEOs” said a spokesperson at Samsung’s future strategy office serving as a control tower of the group. The office was on duty over the weekend.

On the strategy front, Samsung, as scheduled, plans to deal with antitrust authorities in the US, the EU, China and Korea to gain approval for a $8 billion merger with US parts supplier Harman Industries, which the group has been publicly pushing since November. On Friday, Harman’s shareholders voted to approve the merger at a shareholders meeting held in Stamford, Connecticut.

On the business front, the tech firm will unveil its new smartphone Galaxy Tab S3 alongside a teaser image of the Galaxy S8 at the Mobile World Congress, which kicks off on Feb. 26 in Spain. The firm’s flagship smartphone Galaxy S8 will also be unveiled on Mar. 29 as planned. 

The company will also continue to review the establishment of a home appliance factory in the US, as it is under growing pressure to make more investment in the US by President Trump. It is reportedly reviewing investment incentives and geographical conditions in Alabama and South Carolina.

Samsung Electronics’ stock price slightly went down Friday when its heir apparent was taken into custody. Experts said the arrest would not significantly impact the company’s stock price in the future.

“The arrest of Lee is not likely to significantly affect the company’s share price because a stock price is based on the company’s fundamentals and the market trend,” said Song Myeong-seob, an analyst at HI Investment & Securities.

“Rather than the issue involving Lee, the global chip market and the launch of the Galaxy S8 will affect the company’s second quarter earnings,” Song added.

However, Lee’s prolonged absence would affect the company’s future strategy decisions, including those related to mergers and acquisitions and building its overseas network.

“He was scheduled to attend the Boao Forum for Asia in March. Now, it is uncertain whether he can build a network with Asian counterparts there,” a Samsung official said.

By Shin Ji-hye/The Korea Herald (shinjh@heraldcorp.com)