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(2nd LD) Samsung heir Lee charged without detention in high-profile succession case

All News 14:01 September 01, 2020

(ATTN: CHANGES headline, lead; UPDATES with details in first 4 paras, last 7 paras; ADDS photo)
By Woo Jae-yeon

SEOUL, Sept. 1 (Yonhap) -- Prosecutors indicted Samsung Group heir Lee Jae-yong without physical detention Tuesday for his role in controversial merger and accounting fraud allegations, in the latest development of the tumultuous legal saga that has dogged him for years.

Lee, the vice chairman of Samsung Electronics, was charged with stock manipulation, violations of capital market laws and external audits and breach of trust in relation to the 2015 merger between two Samsung affiliates, Cheil Industries Inc. and Samsung C&T, and alleged accounting fraud at the pharmaceutical unit of Samsung Biologics.

Ten other former and incumbent Samsung executives, including Choi Gee-sung and Kim Jong-joong, who had led the group's now-disbanded control tower, the Future Strategy Office, were also indicted on similar charges.

The investigation team led by senior prosecutor Lee Bok-hyun said in a press release Tuesday that they reached a conclusion that judicial judgment is necessary in the case, given "the clear-cut facts supported by evidence, the gravity of the case and the need to resolve the public's suspicions surrounding the case."

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

Prosecutors suspect that Lee was involved in a companywide scheme to plan the merger and fraud in a way to take over control of the country's biggest conglomerate from his ailing father, Lee Kun-hee, who suffered a heart attack in 2014.

They, in particular, believe that the value of Cheil, of which Lee was the largest shareholder with a stake of 23.2 percent, was inflated and that of Samsung C&T was lowered intentionally prior to the merger.

Lee is also suspected of being part of the alleged plan to inflate the value of Samsung Bioepis, a joint venture between Samsung Biologics, a subsidiary of Cheil Industries, and the U.S.-based Biogen Inc.

He has consistently denied the allegations since the investigation started in November 2018.

This photo provided by Samsung Electronics on June 30, 2020, shows Samsung Electronics Vice Chairman Lee Jae-yong (2nd from L) listening to an executive's briefing during a visit to a production facility of Semes Co., a Samsung group affiliate that makes semiconductor and display manufacturing equipment, in Cheonan, some 90 kilometers south of Seoul. (PHOTO NOT FOR SALE) (Yonhap)

Filing the charges against Lee came two months after the prosecution's independent panel recommended in June not to do so, citing difficulties substantiating some of the prosecution's claims.

On June 26, the 14-member panel, including one chairperson, concluded in a 10-3 vote that the prosecution's investigation into the high-profile succession case was not warranted, following a lengthy discussion at the Supreme Prosecutors Office in southern Seoul.

The prosecution has accepted most recommendations by the panel since the system was introduced in January 2018 to keep its power in check and guarantee the fairness of its investigations.

Since the recommendation, prosecutors have gathered various opinions from management and accounting professors and experts in efforts to build up a case against Lee.

The latest development dashed Samsung's de facto leader's hopes to put an end to the prolonged legal battle and focus on the management of Samsung Electronics, the crown jewel of the group.

Lee is up against yet another round of court trials after he was released from prison in February 2018 on a suspended sentence in a corruption case that led to the ouster of former President Park Geun-hye.

He was arrested and charged in February 2017 for giving bribes to then President Park's friend Choi Soon-sil in return for the government's backing of the 2015 merger.

This composite image shows Samsung's heir and de facto leader Lee Jae-yong against a background of the prosecution's logo and building. (Yonhap)

jaeyeon.woo@yna.co.kr
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