Prosecutors seek arrest warrant for Samsung's Lee over 2015 merger of key affiliates

SEOUL, June 4 (Yonhap) -- South Korean prosecutors on Thursday sought an arrest warrant for Samsung heir Lee Jae-yong as part of an investigation into a controversial merger between two Samsung units.

The Seoul Central District Prosecutors Office said it sought arrest warrants for Lee and two former top executives, Choi Gee-sung and Kim Jong-joong, from the group's now-disbanded control tower, the Future Strategy Office.

Three are suspected of being involved in a scheme to facilitate Lee's managerial succession from his ailing father, Lee Kun-hee, by intentionally inflating the value of Cheil Industries Inc. and lowering one of Samsung C&T prior to their merger in 2015 to help benefit the heir apparent.

Lee was the largest shareholder in Cheil Industries, an affiliate that produces textiles, chemicals and electronic chemical materials, with a stake of 23.2 percent.

Prosecutors have also been looking into suspected window dressing by Samsung Biologics, a subsidiary of Cheil Industries in 2015.

They suspect the contract drug manufacturer inflated its valuation by approximately 4.5 trillion won (US$3.64 billion) after fraudulently changing the method used to calculate the value of its stake in Samsung Bioepis, a joint venture with U.S.-based Biogen Inc. After the accounting method was changed, Samsung Biologics swung to a profit.

Lee was called in by the prosecution twice last week for questioning into allegations, and he is said to have denied them.

On Tuesday, Lee and Kim asked the prosecution to have its outside experts review the ongoing probe and determine the validity of its potential indictment of them.

jaeyeon.woo@yna.co.kr
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