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South Korean special prosecutors said they would indict Samsung’s de facto chief Tuesday on bribery, embezzlement and other charges linked to a political scandal that has toppled President Park Geun-hye.

The planned indictment of Samsung Electronics vice chairman Jay Y. Lee is a huge hit for the largest and most successful of the big businesses that dominate the South Korean economy. It also signals the still roiling state of South Korea’s political and economic circles after weeks of massive demonstrations that led to Park’s impeachment.

The announcements of the planned indictments came after a three-month investigation by the special prosecution team, which ended Tuesday after the country’s acting leader refused a request for an extension.

Prosecutors say the Samsung heir gave bribes worth $36 million to Park and her confidante to help win government support for a smooth leadership transfer from Lee’s ailing father to Lee.

Lee also allegedly hid assets overseas, concealed proceeds from criminal activities and committed perjury. The 48-year-old billionaire was arrested Feb. 17. Samsung has denied wrongdoing.

More indictments to come

Prosecutors also said they planned to indict four other Samsung executives on charges of offering bribes, embezzlement, hiding assets overseas and concealing proceeds from criminal activities.

The planned indictments mean that key figures at a powerful yet secretive Samsung office that wielded influence over dozens of Samsung affiliates face trial. Lee promised in December to disband the secretive office, called the Corporate Strategy Office, which allegedly orchestrated bribery schemes centered on Choi Soon-sil, Park’s confidante.

Shortly after the prosecutors’ announcement, Samsung announced a series of measures to improve its transparency, including disbanding the secretive office and resignations from top executives who prosecutors said they would indict. Lee wasn’t included in the resignations, implying he will keep his position and board membership at Samsung Electronics during court proceedings.

The office consists of close Lee family aides who worked to help ensure the father to son leadership transition. Some say that the contentious merger of Samsung C&T and Cheil Industries in 2015 was also overseen by the office, not by the board of directors at the two Samsung companies. The merger, a crucial step for Lee to strengthen his grip on Samsung Electronics, was a key benefit that Samsung sought from the government by offering millions of dollars to Choi’s various entities, according to the prosecutors.

The merger, despite opposition from some shareholders who argued that it unfairly benefited the Lee family, was approved by shareholders thanks to the support of a state-controlled national pension fund, a key Samsung investor.

The special prosecution team said they also plan to pursue additional charges of bribery and concealing proceedings from criminal activities against Choi, who allegedly exploited her presidential ties to extort money and favors from companies and manipulate state affairs from the shadows.

The special prosecution team finished its inquiry without questioning Park, after she backed off from a Feb. 9 interview. The country’s acting leader, Hwang Kyo-ahn, refused to extend the investigation past Tuesday’s deadline.

Father was also indicted

Lee was once the face of the new Samsung, but now follows in the footsteps of his father, Samsung Electronics chairman Lee Kun-hee. The senior Lee was indicted in 2008 on charges of tax evasion and a breach of trust. He was later convicted and then pardoned by a former president.  

Corruption has dogged many other business leaders in South Korea’s family-controlled conglomerates, which are known as chaebol.

When the elder Lee was indicted, Samsung vowed a series of measures to improve transparency. It is expected to announce more measures following the younger Lee’s indictment.

Since Lee’s father fell ill in May 2014, the younger Lee has stepped up his leadership role. Samsung appeared to be trying to change its top-down, hierarchical, authoritarian corporate culture under Lee.

Fluent in foreign languages, educated overseas and linked to Silicon Valley luminaries, Lee was seen as the new face of Samsung. Samsung promised to remove obstacles to creativity and innovation in recent years by introducing a nimble, startup-like attitude. It has increased returns to shareholders and acquired several companies outside South Korea.
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Sales of Cuba’s legendary cigars rose 5 percent last year to $445 million, defying stagnation in the global luxury goods market, manufacturer Habanos S.A. said on Monday at the opening of the Caribbean island’s annual cigar festival.

Habanos, which makes brands including Cohiba, Monte Cristo and Romeo y Julieta, said it expects moderate sales growth this year as it continues to tap the Middle East, Asia and other new markets.

“We are quite happy we were able to grow during a year that was in truth quite challenging,” Vice President of Development Javier Terrés told Reuters after holding a news conference hazy with smoke as journalists puffed on complimentary cigars.

Cuba’s monopoly cigar company was kicking off the festival that attracts wealthy tobacco aficionados and retailers from around the world for five days of extravagant parties and tours of plantations and factories.

Habanos dominates the global market for hand-rolled, premium cigars except in the United States due to Washington’s half-century trade embargo against Cuba. The United States is the world’s biggest cigar market.

American enthusiasts have had slightly better access to Cuban cigars since former President Barack Obama two years ago unveiled a Cuba policy aiming to normalize relations.

Last October, the Obama administration removed limits on the amount of cigars American travelers could bring home.

Terrés said this made little difference to overall sales but it would help brand recognition in the United States.

Wholesale shipments there would require the U.S. Congress to lift the embargo, a move that looks uncertain under President Donald Trump, who has threatened to reverse the detente.

Still, better U.S.-Cuban relations have helped stoke a boom in tourism, which in turn has lifted cigar sales in Cuba, according to Habanos. The number of visitors to the island rose 13 percent last year.

“Our sales in Cuba are directly related to tourism, and in effect, sales in Cuba have grown,” Terrés said.

Habanos said its traditional European markets had remained stable last year, while there was growth in emerging markets like the Middle East and Pacific Asia.

Meanwhile, female smokers remain a largely untapped market for Habanos, Terrés said. The company is working on it but has learned that producing smaller, milder versions of its classic cigars is not the answer.

“Actually, women want to smoke big cigars and enjoy them like a man,” he said, adding it was important to draw in women with specific promotional events.
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Billionaire investor Wilbur Ross easily won confirmation as U.S. commerce secretary on Monday, clearing President Donald Trump’s top trade official to start work on renegotiating trade relationships with China and Mexico.

The U.S. Senate voted 72-27 to confirm the 79-year-old corporate turnaround expert’s nomination, with strong support from Democrats.

Ross is set to become an influential voice in Trump’s economic team after helping shape the president’s opposition to multilateral free trade deals such as the now-scrapped Trans-Pacific Partnership.

Ross drew votes from 19 Democrats and one independent, partly because of an endorsement from the United Steelworkers union for his efforts in restructuring bankrupt steel companies in the early 2000s, which saved numerous plants and thousands of jobs.

Ross was criticized by some Democrats as another billionaire in a Trump Cabinet that says it is focused on the working class, and for being a “vulture” investor who has eliminated some jobs.

Reuters reported last month that Ross’s companies had shipped some 2,700 jobs overseas since 2004.

The investor will oversee a sprawling agency with nearly 44,000 employees responsible for combating the dumping of imports below cost into U.S. markets, collecting census and critical economic data, weather forecasting, fisheries management, promoting the United States to foreign investors and regulating the export of sensitive technologies.

While commerce secretaries rarely take the spotlight in Washington, Ross is expected to play an outsize role in pursuing Trump’s campaign pledge to slash U.S. trade deficits and bring manufacturing jobs back to America.

Trump has designated Ross to lead the renegotiation of the North American Free Trade Agreement with Mexico and Canada, a job that in past administrations would have been left to the U.S. Trade Representative’s office.

Ross will join other major players on the economic team, including Treasury Secretary Steven Mnuchin and Gary Cohn, director of the White House National Economic Council.

Some experts said Ross could serve as a counterweight to advisers such as Peter Navarro, the University of California-Irvine economics professor who heads Trump’s newly created White House National Trade Council. Navarro has advocated a controversial 45 percent across-the-board tariff on imports from China that Trump threatened during his campaign.

“I expect that Ross will quickly become the administration’s chief trade spokesman, and that Navarro’s influence will be felt indirectly, rather than through public statements or testimony,” said Gary Hufbauer, a senior fellow and trade expert at the Peterson Institute for International Economics.

At his confirmation hearing, Ross downplayed chances of a trade war with China, while calling it the “most protectionist” large economy. He vowed to level the playing field for U.S. companies competing with Chinese imports and those trying to do business in China’s highly restricted economy.

Ross, estimated by Forbes to be worth $2.9 billion, built his fortune in the late 1990s and early 2000s by investing in distressed companies in steel, coal, textiles and auto parts, restructuring them and often benefiting from tariff protections put in place by the Commerce Department.
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Japan’s Takata Corp. on Monday pleaded guilty to a felony charge as part of an expected $1 billion deal with the U.S. Justice Department that includes compensation funds for automakers and victims of its faulty airbag inflators.

After Takata’s guilty plea, a federal judge in Detroit was hearing objections on Monday to the settlement raised by lawyers for some victims of Takata inflator ruptures, who argue the settlement will be used by automakers to avoid liability, a court clerk said.

Takata hopes to wins court approval of the settlement, a key hurdle to securing the backing of an investor or acquirer that can fund a turnaround effort and help it grapple with billions of dollars in costs related to the auto industry’s biggest-ever recall.

16 deaths linked to defective air bags

Lawyers for U.S. vehicle owners have sued Honda, Nissan, BMW AG, Ford, Mazda, and other automakers, alleging they knew about the defective Takata air bags for years but kept using them.

At least 16 deaths have been linked to exploding Takata airbag inflators. The defects have led 10 automakers to recall more than 31 million cars worldwide since 2008. All but one of the deaths have occurred in Honda vehicles.

Kevin Dean, a South Carolina lawyer for some Takata victims suing automakers, said in a court filing on Monday that the plea agreement is “wrought with inaccurate, incomplete and misleading assertions of fact” that could help automakers avoid liability.

Three Takata executives charged

Takata last month had agreed to plead guilty to a single count of wire fraud related to receiving payment for the faulty deflators across state lines as part of a settlement with federal prosecutors.

U.S. prosecutors have charged three former senior Takata executives in Japan with falsifying test results to conceal the defect linked to the recall of about 100 million air bag inflators worldwide.

Recall to continue through 2020

In January, Takata agreed to establish two independently administered restitution funds: one for $850 million to compensate automakers for recalls, and a second $125 million fund for individuals physically injured by Takata’s airbags who have not already reached a settlement with the company.

Both funds are expected to be administered by compensation expert Kenneth Feinberg, who managed a similar fund for General Motors.

Automakers in the United States are set to continue recalling defective inflators through 2020. U.S. safety regulators have said automakers are responsible for replacing defective airbags no matter what happens to Takata.
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European Union chief executive Jean-Claude Juncker will propose to national leaders next month a handful of options for shoring up unity once Britain launches a withdrawal that some fear could trigger a further unraveling of the bloc.

The European Commission president wants some states to be able to deepen cooperation further and faster without the whole bloc having to follow suit, but this idea has raised concerns, especially among poorer eastern countries, that their richer neighbors may use Brexit to cut EU subsidies to them.

Juncker has said he will argue for what is commonly called a “multi-speed Europe” in a White Paper policy document.

Juncker will chair a special meeting of his commissioners on Tuesday but a spokesman said on Monday it was not yet clear when exactly the paper would be published.

Officials will not detail what the proposals are likely to be, though say they would probably not mean major institutional changes or treaty amendments for which most governments, beset by challenges from eurosceptic nationalists, have no appetite.

Some options are not mutually exclusive and could be combined, all with the aim of persuading voters disillusioned by years of economic malaise that the EU is worth preserving.

By setting out four or five practical “pathways to unity” or “alternative avenues for cooperation at 27”, EU officials say Juncker aims to give the 27 leaders of the post-Brexit Union some broad choices to start considering at a summit in Rome on March 25, where they will mark 60 years of the bloc’s founding.

As the 27 also try to hold to a common line in the two-year negotiating period with Britain which they expect London to launch before the Rome summit, the main aim of the Juncker proposals is to overcome internal divisions, EU officials said.

He wants to see responses by the autumn – by which time the Netherlands, France and Germany will have held elections marked by challenges from anti-EU movements that have been inspired by last year’s votes for Brexit and U.S. President Donald Trump.

Friction

“This is no longer a time when we can imagine everyone doing the same thing together,” Juncker said last week, echoing German Chancellor Angela Merkel and French President Francois Hollande, who called on Feb. 3 for an EU of “varying speeds.”

Their remarks, however, have perplexed other states whose envoys note that existing rules already allow for “enhanced cooperation” in various fields, such as the 19-nation eurozone.

“A multi-speed Europe is a fact. No one has a problem with it,” said one senior EU diplomat. “So why are they talking like this now? They are irritated with the east … It is divisive.”

Noting that a key obstacle to deeper integration of, for example, the eurozone was disagreement between Berlin and Paris on how to do it, the diplomat said talk of a two-speed approach sounded like an attempt to penalize the post-communist east.

Hungary and Poland in particular have irritated the EU by challenging its rules on democracy and resisting calls to take in asylum-seekers, while Germany has taken in over a million.

Hollande accused easterners of treating the Union “like a cash box”. With Brexit leaving a hole in the EU budget, some diplomats see a push by Paris and Berlin to cut their subsidies.

German officials say Merkel does not see one specific set of countries going for deeper cooperation but imagines varying groups moving ahead in different fields. For example, defense integration is a priority for Germany.

“Some see this as a risk to unity,” one senior official said of Juncker’s multi-speed idea. “Others see a risk if we don’t do it and we fail to aspire.”
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