Another legal battle set to haunt Samsung heir

Lee Jae-yong

Lee Jae-yong charged with fraud in merger

By Kim Se-jeong

Prosecutors indicted Samsung Group Vice Chairman Lee Jae-yong without physical detention, Tuesday, on multiple charges related to a controversial merger of the group's units and alleged accounting fraud.

Lee was indicted on counts of stock manipulation, violation of laws governing the capital market and external audits, and breach of trust during the merger between Cheil Industries and Samsung C&T, as well as accounting fraud at another group affiliate, Samsung Biologics.

The prosecution also indicted 10 former senior executives of Samsung on similar charges for allegedly assisting Lee in the fraudulent activities surrounding the merger.

"It is a case that can have grave consequences. Also, we have clear-cut evidence against them and the case is of interest to the public. With this backdrop, we conclude the case needs a judicial review," said prosecutor Lee Bok-hyun, head of the investigation team, Tuesday.

In response, Samsung criticized the prosecution, saying it was politically charged and had the intention to indict Lee from the beginning.

Tuesday's decision was somewhat unexpected as it came after an independent committee's recommendation against indictment.

On June 26, a 14-member independent committee concluded in a 10-3 vote that the investigation into Lee's case was unwarranted. Although non-binding, such committee recommendations have been almost always accepted by the prosecution.

Vice Chairman Lee, 51, has been under investigation on suspicion of stock manipulation and illegal trading during the 2015 merger of Cheil Industries and Samsung C&T.

The prosecution accused Lee, as the largest shareholder of Cheil Industries, of attempting to lower the price of Samsung C&T, in order to gain more shares in the merged company which could eventually help him consolidate his grip on Samsung Group.

Separately, he allegedly inflated the value of Samsung Biologics, the largest shareholder of which was Cheil Industries.

The investigation started in November 2018 and Samsung has repeatedly dismissed the allegations as groundless.

Tuesday's decision is expected to keep Lee busy attending trials. The merger case is separate from ongoing secondary hearings in a bribery case.

In 2017, Lee was sentenced to five years in prison for his role in a bribery case that was part of a huge corruption scandal involving former President Park Geun-hye and her confidante, Choi Soon-sil. He was released in 2018 after his sentence was suspended by an appeals court. But he was back in court last year after the Supreme Court ordered new hearings in the case last August.

The latest development is expected to add uncertainty at the tech giant, which has been dealing with the effects of the ongoing COVID-19 pandemic.

Site Map E-paper Subscribe Register LogIn
Site Map E-paper Subscribe Register LogIn