Samsung has found itself at the heart of yet another controversy as South Korean prosecutors have announced they’re seeking a warrant to go after the company’s vice president – and current effective leader – Lee Jae-yong. The prosecution claims that Lee Jae-yong partook in government-level bribery and “other misdeeds”, resulting in payments to Choi Soon-sil (an ally of South Korea’s impeached president) to secure approval for a merger.
Samsung isn’t in trouble just yet, as the South Korean court has to approve the warrant but, regardless of what happens, the mere suggestion that Lee could be arrested is a major blow to the company. Samsung is, to all intents and purposes, a family-run business in South Korea, with Lee Jae-yong playing second fiddle to his father, company chairman Lee Kun-hee. Lee Jae-yong has clearly been groomed for the role of chairman once his father passes or steps down, and both of Lee’s sisters also hold prominent positions at Samsung – although neither are in a position to take over the leadership.
An investigation into the accusations around Lee Jae-yong isn’t just damaging to Samsung. In South Korea, Samsung is more than just an electronics manufacturer – it’s the country’s largest employer alongside LG. It provides jobs in electronics, manufacturing, mining, construction, fashion and more. If Samsung was to have a power struggle at the top due to Lee Jae-yong’s corruption allegations, the fate of the company and its economic role in South Korea could be called into question.
After the exploding battery epidemic that befell Samsung last year with the Note 7, any more controversies for the company are particularly dangerous – especially ones surrounding bribery. As you can imagine, Samsung has issued no comment on the situation just yet, but chances are that its top-level folks are preparing for the worst.