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Samsung denies heir's involvement in controversial merger of key affiliates

Consumer Electronics 17:55 June 05, 2020

SEOUL, June 5 (Yonhap) -- Samsung Group on Friday rebutted allegations that its heir was involved in a controversial merger of two group units a few years ago, saying he played no role in any decision-making process.

In a statement, South Korea's largest conglomerate strongly denied Samsung Electronics Vice Chairman Lee Jae-yong's alleged involvement in the merger of the two affiliates -- Samsung C&T Corp. and Cheil Industries Inc., in 2015.

"Allegations that Lee took part in a stock price manipulation scheme are groundless," the group said in a release.

This photo taken on May 6, 2020, shows Samsung Electronics Vice Chairman Lee Jae-yong at a press conference in Seoul. (Yonhap)

Samsung's statement comes one day after local prosecutors sought an arrest warrant for Lee over the 2015 merger, which was seen as a move aimed at smoothing out his succession.

Prosecutors suspect Lee and the group's top management were involved in a calibrated scheme to intentionally lower the value of Samsung C&T prior to its merger with Cheil Industries so as to facilitate Lee's managerial succession from his ailing father, Lee Kun-hee.

Lee Jae-yong was then the largest shareholder in Cheil Industries, an affiliate that produces textiles, chemicals and electronic chemical materials, with a stake of 23.2 percent, which means a fall in the valuation of Samsung C&T would pave the way for a merger ratio advantageous to the Samsung heir.

Samsung said there were no wrongdoings in Cheil Industries' treasury shares trading to defend its valuation during that time as it complies with regulations. It also denied suspicions that Samsung C&T deliberately made a late announcement of an overseas construction deal to slow down its stock value increase.

A Seoul court will hold a hearing on Monday to decide whether to issue the arrest warrant. A decision is expected to come out late at night or early Tuesday.

If the warrant is approved, it will be the first time since 2017 that Lee will be arrested on criminal charges.

In February 2017, Lee was arrested for allegedly offering bribes to a confidante of former President Park Geun-hye. He was initially sentenced to five years in prison, but he was freed a year later after the Seoul High Court reduced the sentence to 2 1/2 years, suspended for four years.

kdon@yna.co.kr
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