Prosecutors charged 11 people, including Lee Jae-yong … Samsung “Investigation aimed at prosecuting Lee Jae-yong from the beginning”

On the 1st, the Seoul Central District Prosecutor’s Office charged Samsung Electronics Vice President Lee Jae-yong under the Capital Market Law on charges of illegal transactions and market price manipulation, negligence in business, violation of the external audit law, etc. There were only 19 detailed charges against him. Ten Samsung executives, including Choi Ji-sung, former head of the Office of Future Strategy, were also indicted on the same day, but the prosecution ruled that Lee was the culmination of the case. He claimed that the merger process between Cheil Industries and Samsung C&T was illegal, and that preparatory accounting for Samsung Biologics was carried out in the process, and that he would hold Lee legally liable.

However, Vice President Lee’s defense team protested, saying, “The prosecution has been conducting an investigation with the aim of prosecuting Lee from the beginning.” They said, “The merger was a legitimate business done out of business necessity,” and predicted a fierce court battle in the future. Vice President Lee has consistently denied the prosecution’s allegations, saying, “I have never ordered a merger and have not received any reports.” On this day, the attorneys issued a lengthy rebuttal of around 2,100 characters.

The prosecution believes that the merger of Cheil Industries (formerly Everland) and Samsung C&T in 2015 was illegal in favor of Lee’s strengthening of control of the group and succession of management rights. At the time of the merger, one share of Samsung C&T was calculated as 0.35 shares of Cheil Industries. Vice President Lee, who owned a 23.3% stake in Cheil Industries but did not have a stake in Samsung C&T, said that through the merger he increased his control over Samsung Electronics. Samsung Electronics, the core of total control of the Samsung Group, had a circular ownership relationship with Samsung C&T.

According to the prosecution, in 2015, Vice President Lee’s stake in Samsung Electronics was the whole family (4.69%)  Samsung Life’s stake in Samsung Life through Everland (7.21%)  Samsung’s stake C&T at Samsung Electronics (4.06%) through circular investment), etc. The prosecution believes that Vice President Lee promoted a managerial succession plan to promote the merger of Samsung C&T by Cheil Industries in order to strengthen the group’s dominance by increasing direct holdings of Samsung Electronics shares.

The prosecution said: “At the time of the merger, Vice President Lee and the Office of Future Strategy made a detailed plan, so that the share price of Cheil Industries, the largest shareholder in Cheil Industries, was formed high and the Samsung C&T stock price fell, through the dissemination of false information, shareholder purchase, illegal lobbying, market price manipulation, Samsung C&T) caused damage to shareholders. “After the merger, we acquired more than 4 trillion won of assets from Samsung Biologics (Samba), a subsidiary, to avoid controversy that it was a favorable merger for Cheil Industries.”

The prosecution also said: “After the announcement of the merger in May 2015, when several domestic and foreign shareholders, including hedge capital Elliott, objected, Vice President Lee confirmed that he had established an emergency response strategy with the Office of Future Strategy and foreign advisers “. The specific evidence of receiving this direct report and issuing orders will be released at trial. “The prosecution also prosecuted the perjury charges, including former team leader Kim Jong-joong and former Samsung C&T CEO Kim Shin -joong, who testified that “the US war bureau did not participate in the merger”, in a court trial in June 2017 in the state case of Nongdan.

However, Samsung’s lawyers refuted it, saying: “It was an unacceptable process.” Most of the prosecution’s complaints were reviewed when the court dismissed the arrest warrant against Vice President Lee in June and the prosecution’s investigative and deliberation committee made the decision to recommend non-prosecution with an overwhelming majority of 10 to 3 , but the case was deemed “ not illegal ”. will be. The lawyers also said: “All the procedures for the merger were carried out legally” and said: “In the case of the Samba accounting dispute, most of the accounting experts do not violate the accounting rules.” Indeed, in the case of a merger invalidation lawsuit filed by Samsung C&T shareholders in 2017, the trial court ruled that “the merger was due to a management need and there is no legal issue.”

The lawyers also objected to the application of the “treason in business” charges against Vice President Lee. The lawyers said: “Since Samsung C&T has gained ownership of the shares of Samba (a Cheil Industries subsidiary) with a market capitalization of 53 billion through the merger with Cheil Industries, the investigation team was also unable to discuss the charges. of non-compliance during the deliberation of the Investigation Deliberation Committee. I added it out of the blue. “Furthermore, he said,” there were no charges of manipulation of the melt index, so the prosecution could not write a single line in the complaint. “Legal officials predicted that” there will be controversy during the trial as to whether this vice president, who did not have a stake in Samsung C&T at the time of the merger, may become the subject of abandonment to Samsung C&T. “

It has been criticized in the legal community that “the prosecution has neutralized the investigation and deliberation committee that it has created.” Some analysts said that the Seoul Central District Prosecutor’s Office justified the continuation of the investigation despite the recommendation of the Investigation Deliberation Committee to stop the investigation into the ‘Channel A case’. On this day, the prosecution said: “By strongly accepting the deliberation committee’s recommendation not to prosecute, some charges have been alleviated, such as reducing about 30 pages from the 160-page complaint.” Samsung said: “Vice President Lee will faithfully go to trial and reveal why this prosecution is unfair in court.”