Lee Jae-Yong, the de facto head and vice chairman of Samsung, is in some trouble again following the Seoul Central District Prosecutors’ Office filed an arrest warrant for him and two former executives, Choi Ji-sung and Kim Jong-Joong.
Back in 2017, Lee was sentenced to 5 years in prison, following a study into charges of bribery, embezzlement, and perjury (he was released immediately after in 2018).
This time around, Lee and both former execs are charged with committing illegal transactions and market manipulation associated with the merger between Samsung C&T and Cheil Industries back in 2015.
In a statement, Lee’s lawyers expressed “deep regret” at the prosecution’s decision, adding that he had fully cooperated with the investigation while the company was going through management crises.
Shares of Samsung Electronics were up 0.4%, outperforming a rise of 0.2% in the benchmark KOSPI <.KS11>.
Prosecutors have been investigating suspected accounting fraud at drug company Samsung Biologics after the Korean financial watchdog complained the firm’s value had been inflated by 4.5 trillion won ($3.7 billion) in 2015.
The prosecutors contend the violation helped boost the value of its major owner, Cheil Industries, which counted Lee as its top shareholder, and merged with Samsung C&T, a de facto holding firm, Yonhap news agency said.
Cheil is just a major owner of Samsung BioLogics and Lee is Cheils’ largest shareholder. What the prosecution is alleging is that accounting fraud was devoted to boosting the valuation of BioLogics (by $3.7 billion, according to a Korean financial watchdog), just before the merger with Samsung C&T.
Cheil Industries is itself a joint venture partner of the Samsung Group, there’s too much to untangle here.
In July this past year, the prosecution requested arrest warrants for three executives of Samsung BioLogics, including CEO Kim Tae-Han.
They were accused of changing the ownership status of Samsung Bioepis from subsidiary to affiliate, which triggered a different accounting method, causing a surge in the valuation of Bioepis (and in turn the valuation of BioLogics and Cheil Industries).