S. Korea court rejects arrest warrant for Samsung heir

A South Korean court on Thursday refused to authorise the arrest of the heir to the Samsung business empire, in a setback to prosecutors probing a corruption scandal engulfing President Park Geun-Hye.

Officials on Monday sought the arrest of Lee Jae-Yong on charges of bribery, embezzlement and perjury, sending shock waves through the group, which is a major part of the South Korean economy and includes the world's largest smartphone maker.

It is already reeling from the debacle over the recall of its flagship Galaxy Note 7 device and reports have suggested it could face sanctions from overseas authorities if Lee is punished.

Lee, who became Samsung's de facto head after his father suffered a heart attack in 2014, is accused of bribing Choi Soon-Sil, Park's secret confidante at the centre of the scandal, and receiving policy favours from Park in return.

But the court rejected the request on grounds of insufficient evidence, which could mar investigators' plan to question Park -- impeached by parliament last month -- on charges of bribery.

A spokesman for the prosecution team described the decision as "very regrettable" but said they will "carry on with our probe without wavering".

Analysts questioned the decision.

Kim Nam-Geun, a Seoul lawyer and a political commentator, accused the court of being soft on Samsung because of media pressure and the potential wider economic impact of Lee's arrest.

"A court usually approves arrest warrants over bribery cases involving such an enormous amount of money and circumstantial evidence," Kim said.

Samsung is South Korea's largest business group and its revenue is equivalent to about a fifth of the country's GDP.

As well as the investigation of Park, the decision could weaken prosecutors' probes into the heads of other conglomerates implicated in the scandal, said Choi Chang-Ryol, a professor of politics at Yongin University.

"It would be far easier for prosecutors to quiz Lee if they have him under detention, and eventually build a bribery case against Park as well," he said.

- Camera flashes -

Lee, 48, was seen early Thursday leaving a detention centre where he had awaited the decision for the previous 18 hours, following a hearing by the court.

With a slight smile, wearing a long coat and tie and carrying a shopping bag, he was led out by a security guard to a barrage of camera flashes, and was driven away without responding to questions from a horde of journalists.

Investigators said Lee gave or promised some 43 billion won ($36.3 million) worth of bribes to Choi, allegedly in return for the state pension fund's backing of a merger of two Samsung affiliates -- deemed crucial for Lee's hereditary succession at Samsung.

Lee and his lawyers have claimed Park pressured it into making donations, but that it did not expect special favours in return for the funds.

In a statement released by the prosecutors, the court said it was "difficult to accept the reasons, need and justification" for his arrest.

"We appreciate the fact that the merits of this case can now be determined without the need for detention," Samsung said in a statement on Thursday.

- Merger deal -

Choi is accused of using her presidential ties to force top local firms into donating nearly $70 million to two non-profit foundations controlled by her.

Samsung is the single biggest contributor to the foundations and separately paid Choi millions of euros, allegedly to bankroll her daughter's equestrian training in Germany.

Prosecutors have been probing whether Samsung's payments were aimed at securing government approval for the controversial merger of Cheil Industries and Samsung C&T in 2015.

It was opposed by many investors who said it wilfully undervalued Samsung C&T's shares. But it was backed by the National Pension Service, a major Samsung shareholder.

Park, accused of colluding with Choi to extract money from the firms and letting her friend meddle in a wide range of state affairs, was impeached by parliament last month.

Both Park and Choi, who is on trial for coercion and abuse of power, have denied any wrongdoing as the Constitutional Court is reviewing the validity of the impeachment.

If the court upholds the impeachment, a presidential vote will be held in 60 days, with Park immediately losing executive privilege that protects her from criminal indictment.