Samsung Electronics vice chairman Jay Y. Lee is surrounded by media as he leaves the office of the independent counsel in Seoul, South Korea, January 13, 2017. Kim Do-hoon/Yonhap via REUTERS ATTENTION EDITORS - THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY. SOUTH KOREA OUT. FOR EDITORIAL USE ONLY. NO RESALES. NO ARCHIVE.

South Korean prosecutors have sought the arrest of the de-facto head of the Samsung Group, Vice President Jay Y. Lee, as part of an ongoing investigation into a political bribery scandal. This is just the news that Samsung certainly doesn’t want, as the company tries to recover from the exploding Galaxy Note 7 saga.

The New York Times has reported that Mr Lee is accused of bribing the suspended South Korean president Park Geun-hye, in the form of multi-million dollar donations to organisations connected to President Park. The connection is not especially strong, but as we understand it, the link goes like this:

  • Mr Lee made multi-million dollar donations to two foundations controlled by President Park’s friend, Choi Soon-sil.
  • The donations were, it is alleged, effectively bribes, given in exchange to get the South Korean (government) pension fund to back a merger between two of Samsung Group’s holding companies.

That merger – between Samsung’s C&T Corp. construction and trading business and its Cheil Industries chemicals business – went through, with backing from the South Korean pension fund, though we understand that not all shareholders supported the move, as it gave Mr Lee’s family a greater control over the group.

Lee denies that the donations were bribes, distancing himself from Samsung’s decision to make the $17m in donations to Choi. On the contrary, Lee claims that the company was extorted rather than offering bribes.

Whatever the case, South Korean prosecutors think there’s enough in it to investigate further, and taking the step of seeking Mr Lee’s arrest is a significant one in any criminal investigation. We understand that prosecutor Park has made a request to a court in Seoul for the arrest warrant, but it hasn’t yet – at the time of writing – been issued.

There’s more to this story, but it’s beyond the scope of what we usually cover here on Ausdroid. CBS News has a good article explaining the issues involving South Korean President Park and her friend Choi Soon-sil for those who are interested.

For us, though, the impact is unlikely to be clear for some time, if at all. Will this move have an impact on Samsung’s immediate business in Australia, its upcoming mobile launches and the like? Almost certainly it won’t, but the news for Samsung as a whole is far from good.