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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”.

Image source Wikimedia

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.

Samsung shares dropped more than 6% on September 12 after the South Korean company urged users not to use its flagship Galaxy Note 7 phone and exchange the device due to fears it might catch fire.

The company hit a two-month low after recalling 2.5 million phones last week following reports of the Galaxy Note 7 exploding during or after charging.

Photo Samsung

Photo Samsung

Airline passengers were warned by the FAA not to use or charge the phones while on board.

Aviation authorities in several other countries and individual airlines have since then also banned the use of the devices on their flights.

Samsung had already said it would replace all devices that customers would hand in.

According to the company, battery problems were behind the phones catching fire, but Samsung said it was difficult to work out which phones were affected among those sold.

The Galaxy Note 7 was launched last month and has been otherwise generally well-received by consumers and critics.