Samsung Group's market cap dropped by two trillion won, or approximately $1.7 billion since the conglomerate's Vice Chairman and heir Jay Y. Lee was arrested on Friday, February 17. On Friday, the company's share price dropped by 0.42% to approximately $16,000. Meanwhile, the stock price of Samsung C&T dropped by 1.98% and caused a $377 million market cap loss. Likewise, share prices of a number of other Samsung Group's subsidiaries dropped following Lee's arrest. The valuations of other South Korean conglomerates involved in the influence-peddling scandal that resulted in Samsung Group's Vice Chairman getting arrested have also declined since Friday morning when the Supreme Prosecutor's Office (SPO) announced that Lee will be waiting for his trial in the Seoul Detention Center.
The corruption scandal that shook the Far Eastern country last fall revolves around the South Korean President Geun-hye and her close associate Choi Soon-sil. The duo allegedly forced some large businesses in the country to donate to several organizations that have previously backed President Park' policy initiatives. Samsung Group is apparently the largest company guilty of that offense as Lee is accused of personally donating over $37 million to two organizations connected to Choi and her daughter Chung Yoo-ra. Lee's donations were apparently intended as bribes meant to facilitate a controversial 2015 merger between Samsung C&T and Cheil Industries. The merger of Samsung Group's affiliates apparently directly benefited Lee as it facilitated the succession proceedings within the company by giving more power to the branch of Samsung Group controlled by the Lee family.
The investigation into the largest corruption scandal in the modern history of South Korea is currently slated to be concluded on February 28. However, the SPO previously revealed that it will ask for a 30-day extension due to the convoluted and sensitive nature of the manner. The South Korean Supreme Court will soon vote on whether to impeach President Park, while Choi and Chung are both waiting for their trial in jail, just like Lee. While some industry watchers speculated that Lee's arrest will inhibit Samsung Group's short-term plans concerning mergers and acquisitions, his absence still isn't felt seeing how the company just moved forward with the largest foreign acquisition in its history.