SPECIAL prosecutors have indicted Samsung Group Chairman Lee Kun-hee on charges of tax evasion and breach of trust, though cleared the conglomerate of allegations it kept a slush fund used for bribery.

The announcement yesterday concludes a three-month inquiry into a slew of alleged wrongdoing at South Korea's biggest industrial conglomerate. Lee and close family members have been summoned for hours of questioning.

The prosecutors said in a statement that they would not arrest Lee as it would "cause enormous disruptions" in Samsung corporate management. The "negative repercussions on our economy would be very big amid the extremely competitive global economic situation," they said.

The investigation began in January and was spurred by accusations made late last year by former top Samsung attorney Kim Yong-chul. The conglomerate has denied the allegations, including claims that it bribed prosecutors and officials.

Cho Joon-woong, who led the investigation, said prosecutors found "no trace" of systemic bribery.

The inquiry also examined long-simmering allegations by civic groups Samsung had used dubious financial transactions to ensure corporate control passes from Lee to his son. The investigation essentially agreed with that view.

"Samsung Group has a lot of structural problems, such as illicit transfer of management control," the prosecutors' statement said.

"It is the hope of our investigation team that this probe would serve as an opportunity for Samsung to shed these problems and be reborn as an undisputed ultra-first-class global company."

The firm vowed to act on that advice. "Samsung is preparing reform plans, based on advice from various sectors of our society," Lee Soon-dong, president of Samsung's strategic planning office, said in a statement. He also said Samsung "would like to apologize for causing concerns."

Prosecutors said that they found 4.5 trillion won (US$4.5 billion) of Chairman Lee's personal assets in bank accounts under borrowed names and that he evaded taxes worth 112.8 billion won.

If found guilty Lee could face a sentence of between five years to life in prison, though judges also have leeway to issue a sentence in which no jail time would be done.

Prosecutors said the breach-of -trust charge resulted from Lee having been briefed by aides about dubious financial transactions, including the sale of bonds convertible to shares to Lee's children. He was also charged with violating the nation's stock-exchange laws.

Samsung Vice Chairman Lee Hak-soo, regarded as Lee's closest confidante, and two other executives were also indicted on breach-of-trust charges. In total, 10 Samsung executives were charged.