In addition, Lee also faces charges of breach of trust in his involvement of the arranging for Samsung subsidiaries to sell stock to his son, Jae Yong, at deeply discounted prices, in order to help him take over management of the company.

South Korea's parliament ordered the special prosecutor to begin an investigation four months ago, after a former legal council for Samsung, Kim Yong-chul, reported the allegations.

Nine other Samsung executives were reportedly indicted on similar charges for their roles in the alleged corruption schemes, but were not arrested because, according to special prosecutor Cho Joon-woong, they had "admitted their wrongdoing" and because their arrest would disrupt the management of Samsung and endanger the national economy. The Samsung Group is said to account for one-fifth of the country's total exports.

Samsung is planning a press conference to discuss the allegations next week.

Prosecutor Cho said that his investigators discovered $4.54 billion in hidden funds Lee kept in accounts held by his aides. In a decision that drew strong criticism, Cho accepted Lee's argument that the money was part of an inheritance from his father and Samsung founder, Lee Byung-chull.

Lee, however, reportedly also did not pay taxes on the profits from those accounts, Cho said.

The Samsung chairman had previously announced that he would step down as head of the company, pending the outcome of the investigation.

Two of Lee's aides received a suspended prison term in 1996, for illegally selling a controlling stake in a Samsung subsidiary to Lee's son at a discounted price, but Lee denied involvement at the time.