South Korean prosecutors indicted the Samsung Group’s Lee Jae-yong on Tuesday on suspicion of accounting fraud and stock price manipulation in connection with a 2015 merger, dealing a new blow to the head of one of Asia’s most valuable companies.
Lee, who has already served jail time in connection with a separate case, and 10 other current and former Samsung executives were indicted over the merger of two Samsung affiliates that helped Lee assume greater control of the group’s crown jewel, Samsung Electronics.
The indictment paves the way for Lee, 52, to undergo trial on the allegations. He will not be detained as a Seoul court denied a request from prosecutors in June for an arrest warrant.
But the court said prosecutors seemed to have secured a considerable amount of evidence and it was appropriate to send the case to trial.
The decision comes as President Moon Jae-in rallies big business during a recession driven by the coronavirus, and at a time the public might be more interested in controlling the disease and reviving livelihoods than punishing the family-run conglomerates, known as chaebol, that dominate the economy.
Charges against Lee included the practice of unfair transaction and manipulation of market prices under the Capital Markets Act, breach of trust during the course of business, and false disclosure and accounting fraud under the External Audit Act, prosecutors said.
“We took into account the gravity of the issue, which disturbed the order of the capital market,” said Lee Bok-hyun, senior prosecutor at the Seoul Central District Prosecutors’ Office.
Lee Jae-yong’s attorneys denied the allegations, calling the indictment unjust, but said the defendants would “conscientiously participate” in a trial.
The US$8 billion merger of affiliates Samsung C&T Corp and Cheil Industries in 2015 was seen as key to Lee increasing control of the group, even as critics said it rode roughshod over the interests of minority investors.
(Agencies)