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Samsung heir Lee Jae-yong to attend arrest warrant hearing over succession probe

All News 06:00 June 08, 2020

SEOUL, June 8 (Yonhap) -- Samsung heir Lee Jae-yong will attend a court hearing on Monday to determine whether a warrant will be issued for his arrest over succession-related allegations.

Last week, the Seoul Central District Prosecutors Office sought an arrest warrant for Lee, de facto head of Samsung group and vice chairman of Samsung Electronics, over the controversial merger of two Samsung affiliates in 2015.

Prosecutors also requested warrants for two former Samsung executives, Choi Gee-sung and Kim Jong-joong, from the group's now-disbanded control tower, the Future Strategy Office.

They were charged with unfair trading, stock price manipulation and violation of laws on external audits.

Kim faces an additional charge of making a false testimony in court.

Lee Jae-yong, vice chairman of Samsung Electronics (Yonhap)

The prosecutors suspect the group's top management of having been deeply involved in what they believe was a systemic effort to help transfer power of the country's largest conglomerate to Lee from his ailing father Lee Kun-hee, who suffered a heart attack in 2014.

They, in particular, believe that Lee was involved in a scheme to inflate the value of Cheil Industries Inc. and lower that of Samsung C&T prior to the merger in 2015.

As part of the power transfer effort, they were also suspected of inflating the value of Samsung Bioepis, a joint venture between Samsung Biologics and the U.S.-based Biogen Inc., by approximately 4.5 trillion won (US$3.64 billion).

Samsung Biologics is a subsidiary of Cheil Industries, of which Lee was the largest shareholder, with a stake of 23.2 percent.

This file photo, from May 6, 2020, shows Samsung Electronics Co. Vice Chairman Lee Jae-yong, the heir apparent of Samsung Group, attending a press conference at the company's office building in Seoul to make a rare public apology over controversies related to his succession. Prosecutors sought an arrest warrant for Lee on June 4, 2020, as part of an investigation into a controversial merger between two Samsung units. (Yonhap)

The probe began in November 2018 when the Securities and Futures Commission under the Financial Services Commission filed a complaint against Samsung Biologics over suspicions of accounting fraud. Prosecutors have since expanded the probe with suspicions that the alleged accounting fraud might have been aimed to help Lee assume control.

Up until now, they have questioned Lee and several other former and incumbent Samsung executives over the top management's role in the 2015 merger. They include Choi Gee-sung, former head of the Future Strategy Office, and Chang Choong-ki, former deputy chief of the office.

Samsung has said that it has never deliberately manipulated the value of its companies and the prosecution has wrongly viewed the 2015 merger as related to its management succession.

If the warrant is approved, it will be the first time in 28 months that Lee will be arrested for criminal charges.

Lee was imprisoned for about a year in 2017 for bribing a confidant of former President Park Geun-hye in return for her administration's support for the 2015 merger.

He was released in February 2018 after his sentence was suspended by an appeals court. But the Supreme Court ordered a retrial last year revising the size of the bribes.

Last month Lee made a rare public apology over the group's involvement in the scandals.

The prosecutors' requests for arrest warrants came just two days after Lee requested an outside review of the investigation and a possible indictment.

The system was introduced by prosecutors in 2018 to enhance neutrality and fairness of their probes into cases that are of great public interest.

Business circles, including Samsung, have criticized the prosecution for ignoring its own reform measure by requesting the warrant while a legal procedure for convening the outside panel was under way.

If the request for an arrest warrant is rejected, the outside review panel is expected to have a greater influence on the prosecution's decision to indict Lee. Otherwise, the request for an outside review may become virtually meaningless.


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