South Korea court rejects arrest warrant for Samsung heir Lee Jae-Yong

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. Lee, 48, was seen 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 (USD 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.