Samsung VP Lee Jae-yong has been arrested in South Korea on charges of bribery.
The case is linked to Choi Soon-sil scandal that led to the impeachment of President Park Geun-hye.
The tech giant is accused of giving donations to non-profit foundations operated by Choi Soon-sil, a friend of President Park Geun-hye, in exchange for government favors.
Lee Jae-yong and the Samsung Group deny any wrongdoing.
He was first questioned by prosecutors in January, but they decided then not to arrest him.
However, Lee Jae-yong was questioned for a second time earlier this week.
On February 17, the court said it “acknowledged that it is necessary to arrest [Lee Jae-Yong] in light of a newly added criminal charge and new evidence”.
The prosecution will now investigate further, and has 20 days to file formal charges. The arrest does not reflect a court opinion on guilt or innocence but only means it considers the potential crime very serious or that it assumes a flight risk.
Prosecutors accused Lee Jae-yong of giving donations worth 41 billion won ($36 million) to organizations linked to Choi Soon-sil. They alleged this was done to win government support for a big restructuring of Samsung that would help a smooth leadership transition in favor of Lee Jae-yong, who is standing in as chairman for his ill father, Lee Kun-hee.
The controversial merger required support from the national pension fund – the allegation is that this support was granted in return for the donations.
In a December parliamentary hearing, Samsung admitted giving a total of 20.4 billion won to two foundations, but denied seeking favors in return.
Lee Jae-yong also confirmed the firm gave a horse and money to help the equestrian career of Choi Soon-sil’s daughter, Chung Yoo-ra, something he said he now regrets.
This centers around President Park Geun-hye’s ties to Choi Soon-sil and has brought allegations of cult activities, influence-peddling and leaks of classified information.
Choi Soon-sil is a long term family friend whose father had already had close ties with Park Geun-hye’s father who was president in the 1970s.
As well as soliciting donations, Choi Soon-sil is accused of using their friendship to interfere in politics.
Choi Soon-sil is now on trial charged with various offences, including abuse of authority, coercion and attempted fraud, and denies wrongdoing.
Parliament voted in December to impeach President Park Geun-hye. Her case is now being heard by the constitutional court. Meanwhile she has been stripped of her presidential powers.
Lee Jae-yong is currently vice-chairman of Samsung Electronics. But since his father, Lee Kun-hee, suffered a heart attack in 2014, he is considered de facto boss of the entire Samsung Group conglomerate.
Regardless of the outcome, a trial is a big blow to Samsung. Lee Jae-yong’s arrest may not affect short term production or the running of the firm but there could be long term implications.
Shares in Samsung conglomerate’s companies lost between 0.5% and 2% on February 17.