South Korea special prosecutors' corruption probe to end

PIC: Pro-government activists shout slogans and wave flags as they stage a rally in central Seoul on Saturday. (AFP)

Special prosecutors investigating the swirling corruption scandal that has embroiled South Korea's impeached President Park Geun-Hye and a host of major companies lost a bid to extend their inquiry Monday.

The decision means they only have until Tuesday to decide whether they will indict the heir to the Samsung empire Lee Jae-Yong, who was arrested earlier this month on bribery and other charges.

The special prosecutors, appointed by parliament in December to handle the probe, have been looking into allegations Samsung bribed Park's confidante Choi Soon-Sil to win state approval for a controversial merger of two of its units.

South Korea's Yonhap news agency, citing unnamed sources, said they were planning to indict the businessman if no extension was granted.

Acting President Hwang Kyo-Ahn, who is standing in for Park while the Constitutional Court decides whether to remove her from the Blue House, rejected the special prosecutors' request for an extension, citing concerns for political stability.

"After thinking long and hard, the acting president judged it was best to allow (state) prosecutors to take over to ensure stability," Hong Kwon-Heui, a spokesman for the Prime Minister's Office, told reporters.

The special prosecutor's team said the decision was "regrettable" but vowed to "thoroughly wrap up the case" and cooperate with the state prosecutors who will retake control over the investigation.

Before the special prosecutors stepped in, state prosecutors had described Lee and other business leaders as victims who were forced to pay out large sums of money for fear they would be disadvantaged if they refused.

The scandal centres on Park's close friend Choi, who is accused of using her ties with the president to meddle in state affairs and to force millions of dollars from local firms.

The main opposition Democratic party called Hwang's decision "a historic atrocity that dumped cold water on people's expectations".