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(LEAD) Snags emerge in Samsung's businesses as Lee quizzed in corruption scandal

All Headlines 11:20 January 13, 2017

(ATTN: ADDS lawsuit by Harman shareholders in paras 12-13)

SEOUL, Jan. 13 (Yonhap) -- Samsung Group, South Korea's biggest business conglomerate, is bracing for a possible leadership vacuum as the group's de facto chief, Lee Jae-yong, was questioned as a suspect in the corruption scandal that led to the impeachment of President Park Geun-hye.

Special prosecutors investigating the scandal questioned the vice chairman of Samsung Electronics for about 22 hours, and they are considering seeking an arrest warrant against Lee, the only son of ailing Samsung Electronics Chairman Lee Kun-hee.

Samsung is accused of allegedly donating 20.4 billion won (US$17.2 million) to two foundations set up by Park's longtime friend, Choi Soon-sil.

Samsung also signed a 22 billion-won consulting contract in August 2015 with a Germany-based firm owned by Choi and allegedly sent the company 3.5 billion won to fund her daughter's equestrian training, according to prosecutors.

Lee Jae-yong, vice chairman of Samsung Electronics Co., leaves the special prosecutor's office in Seoul on Jan. 13, 2017, after 22 hours of questioning over allegations Samsung Group offered financial aid to President Park Geun-hye's longtime friend Choi Soon-sil, the woman at the center of a massive corruption scandal, in return for business favors. (Yonhap)

Samsung denied the prosecutors' allegations, claiming they are not related to a 2015 merger of its two affiliates that was seen as important for the junior Lee's succession plan.

With special prosecutors weighing the fate of the junior Lee, Samsung officials expressed worries that the group's key businesses would hit a standstill if the vice chairman is arrested.

As the scandal has engulfed the group for months, Samsung has not conducted its annual personnel reshuffle and failed to lay out its business targets for this year.

"Key business decisions are being delayed at a time when we need to revamp our organizations to meet a rapid change in the business environment," a Samsung official said.

Last November, Samsung Electronics announced a $8 billion deal to acquire Harman International Industries Inc.

Some shareholders of Harman are expected to vote against the deal because they argue that the price was not sweetened enough.

Samsung officials also voice worries that the Harman deal may be negatively affected by the corruption probe.

Last week, shareholders of Harman filed a class-action suit against the company's chief executive, saying the deal's price fell short of Harman's corporate value.

The lawsuit, filed with the Delaware Chancery Court, criticized Harman Chairman and CEO Dinesh Paliwal and other directors for allegedly breaching their fiduciary duty.

The junior Lee, who is banned from leaving the country amid the allegations, appears to be skipping some global conferences he had regularly attended before, including an annual Boao Forum in China, group officials said.
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