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Samsung heir indicted over merger

September 1, 2020

Stock manipulation and other charges against Jay Y. Lee relate to a controversial merger of two business units. It's the latest blow for the businessman already embroiled in legal woes.

Jay Y. Lee in Seoul
Image: Reuters/Kim Hong-Ji

Samsung Group leader Jay Y. Lee has been indicted on multiple charges over a controversial 2015 merger of two business units, a prosecution official said Tuesday.

The merger of Samsung C&T and Cheil Industries helped Lee — the company's de facto leader — take greater control of the group's flagship company, Samsung Electronics.

The charges include 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 in a statement.

Ten other current and former top Samsung executives were also charged.

Lee and his subordinates stand accused of having carried out "a systemic scheme to take control of the Samsung Group with the least cost," said the prosecution, by deploying "various unfair transactions."

Prosecutors chose to indict Lee despite an independent panel's recommendation in June not to, said officials.

A Seoul court had said prosecutors seemed to have secured a considerable amount of evidence and it was appropriate for the case to go to trial. 

Lee's lawyers did not have an immediate comment.

Legal woes mounting

Lee was sentenced to five years' imprisonment in 2017 after being found guilty of bribery, embezzlement and other charges. The bribery charges were related to Lee allegedly giving horses to the daughter of a confidante of former President Park Geun-hye to win government support for the merger of the two affiliates.

He was released about a year later after winning an appeal — but South Korea's highest court in 2019 ordered a retrial.

Lee made a rare apology in May over the scandal, pledging to ensure "there will be no more controversy over the succession."

kmm/stb (AFP, Reuters)