It seems there’s no end in sight for Samsung heir Lee Jae-yong’s legal troubles. Prosecutors in South Korea have now sought arrest warrants for the Samsung Group Vice Chairman and defacto heir as part of their investigation into alleged accounting fraud and a controversial merge between two Samsung units.
He has already done a stint in prison when he was arrested three years ago on charges brought up on bribery allegations. After spending almost a year in prison during which he filed an appeal against his prison sentence, Lee was let go as his five year sentence was reduced in half and suspended, which meant that he did not need to serve time behind bars.
2015 merger continues to haunt Samsung’s heir
While that matter continues to run its course, Lee Jae-yong’s latest troubles are linked to the 2015 merger between Samsung C&T and Cheil Industries. The merger was widely viewed as a way to make Lee the largest shareholder of Samsung C&T, which is basically a holding company for the entire Samsung Group, and also paved the way for his eventual succession as chairman of the empire.
The deal has remained controversial ever since. Ilsung Pharmaceutical, which had a 2.11 percent stake in Samsung C&T before the merger, had filed a case to have it nullified as Ilsung claimed the merger with Cheil Industries was “unfair” to shareholders. The Seoul Central Court ruled in 2017 that no illegality was found during the merger process which meant that no grounds existed to nullify it.
In addition to investigating this merger, the Seoul Central District Prosecutors’ Office has also been looking into allegations of accounting fraud at Samsung Biologistics. Lee was summoned for questioning at the office on May 26. South Korean prosecutors are now seeking an arrest warrant for Lee Jae-yong.
They seek Lee’s arrest on suspicions that include violations of audit rules and manipulation of the stock price. The Seoul Central District Court will review the request for warrants on June 8. Lee’s lawyers have expressed “deep regret” at the prosecution’s decision to seek warrants, pointing out in a statement that Lee has continued to provide his full cooperation with the investigation.
In a rare move, Lee Jae-yong apologized last month for Samsung’s failure to “comply with laws and ethics” and also promised to not pass on management control of Samsung to his children. A significant decision as after him, it would be the first time that a direct descendant of his grandfather Lee Byung-chul, who started Samsung in 1938, would not be in the driving seat.