Samsung vice-president and heir apparent Lee Jae-yong is to be formally indicted on multiple charges including bribery and embezzlement, South Korean prosecutors said.
The case is tied to the Choi Soon-sil scandal which led to the impeachment of South Korea’s President Park Geun-hye.
The special prosecutor’s office announced the charges against the de-facto Samsung chief, along with four other company executives.
Three of those executives resigned on February 28 following the announcement.
Samsung also said it was dismantling its corporate strategic office, a unit coordinating the various arms of the huge conglomerate.
The tech giant is accused of giving donations to non-profit foundations operated by Choi Soon-sil, a close friend of President Park Geun-hye, in exchange for government favors.
Lee Jae-yong had been arrested earlier this month as prosecutors prepared the indictment.
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 company 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 President Park’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.
In December 2016, the parliament voted 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.
Regardless of the outcome, Lee Jae-yong’s trial is a big blow to Samsung. His arrest may not affect short term production or the running of the firm but there could be long term implications.
Samsung is one of the biggest electronics companies in the world and for the head of a company that thrives on a premium brand image to be involved in a corruption scandal is a huge embarrassment.
Earlier in February, when Lee Jae-yong was first arrested, Samsung said it would do its best “to ensure that the truth is revealed in future court proceedings”, though denies wrongdoing.