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South Korea seeks arrest warrant for Samsung heir Jay Lee in merger probe

South Korea seeks arrest warrant for Samsung heir Jay Lee in merger probe - Appy Pie

South Korean prosecutors have filed an arrest warrant against Samsung Group heir Jay Y. Lee and two former company executives in an investigation of a controversial 2015 merger and alleged accounting fraud to aid his succession plans. Prosecutors said the new warrant against Lee was sought on suspicions of stock price manipulation, among other offenses.

The move will bring in fresh trouble for Lee if he is arrested. He will have to return to jail just a little over two years after being released from detention in February 2018. Lee has already spent a year in detention as he was facing a trial on a charge of bribery aimed at winning support to succeed ailing group patriarch Lee Kun-hee, and which involved former President Park Geun-Hye. As per the last trial he had bribed Park to win Korean Government support for the 2015 Samsung merger. After spending a year in detention and he was freed when the bribery case was suspended in the year 2018.

The prosecutors have been investigating and analyzing suspected accounting fraud at the drug company, Samsung Biologics after complaints that the firm’s value had been inflated by about USD 3.7 billion before the year 2015. Prosecutors suspect and contend that the value of Cheil Industries, an electronics materials provider, was intentionally inflated before its 2015 merger with Samsung C&T, Samsung Group’s de facto holdings company, to achieve a favorable rate for the heir Jay Y. Lee, who at the time was the biggest shareholder in Cheil Industries.

However, the Samsung group executives have declined to comment on the issue. The company and its Attorneys have even issued a statement in which they have requested an outside review of the probe to weigh the validity of the indictment and accusations. The Seoul Central District Prosecutors’ Office is following the necessary procedures in the investigation against Jay Y. Lee.

Lee’s lawyers in another statement expressed regret at the prosecution’s decision to seek his arrest and even said that he had fully cooperated with the investigation even though the company was going through a management crisis.

 In May 2019, Lee had also appeared before prosecutors to be questioned over the merger of two Samsung units.  He had also apologized for a series of controversies taking rounds over his succession planning and he had also vowed to guarantee labor rights at Samsung.

Samsung that time had said seven of its affiliates, including Samsung Electronics, had set up a labor-management relations group, aiming to improve policy.

Despite all these Samsung Electronics shares were up 1.1 percent, outperforming a rise of 0.2 percent benchmark.