Samsung heir avoids arrest over controversial merger
09 June, 2020
A South Korean court on Tuesday (Jun 9) declined to issue an arrest warrant for the heir to South Korea's Samsung empire over a controversial merger of two sections regarded as a key step to his succession, Yonhap news agency reported.
Lee Jae-yong, vice chairman of Samsung Electronics, has already been being re-tried on charges of bribery, embezzlement and other offences in connection with a corruption scandal that brought down former South Korean president Park Geun-hye.
The merger case is separate from his ongoing retrial, but increases the difficulties for the Samsung group, by far the biggest of the family-controlled conglomerates, or chaebols, that dominate business in the world's 12th-largest economy.
Prosecutors had sought the arrest warrant for Lee on suspicion he was involved with price manipulation and illegitimate trading through the 2015 merger of Cheil Industries and Samsung C&T.
However the Seoul Central District Court rejected the prosecution's request, ruling there was not satisfactory probable cause for his arrest, Yonhap reported.
Prosecutors had also asked for a warrant against two former Samsung executives over their role in the merger, but Yonhap said in addition they avoided arrest.
"There was insufficient explanation on the necessity to arrest the defendants against the principle of trial without detention," Judge Won Jung-sook said, according to Yonhap.
"The basic facts (of the case) have already been all explained. And prosecutors seem to be to have previously secured significant amount of evidence through their investigation," she said.
Lee attended the hearing, which Yonhap said lasted for approximately nine hours, and then awaited the court's decision at a detention centre. He emerged at about 2.40am on Tuesday and gave a short greeting to reporters but didn't answer a question on how he felt about your choice.
Lee then left in a black sedan.
The merger transaction was viewed as helping ensure a smooth third-generational power transfer to Lee, a scion of Samsung's founding family.
Chaebol families often have only a tiny ownership stake within their empires, but maintain control through complex webs of cross-shareholdings between units.
APOLOGY
Lee was the most significant shareholder in Cheil Industries, and critics say Samsung sought to artificially lower the cost of C&T to provide him a bigger stake in the merged entity - a key section of the Samsung structure - consolidating his grip on the conglomerate.
The other day, the Samsung group rejected media reports of price manipulation as "groundless", saying in a statement Lee did not be a part of "any illegal acts".
The prosecutors' request came weeks after Lee issued a wide-ranging apology for company misconduct and promised to get rid of the line of family succession.
Lee, 51, has effectively been at the helm of Samsung - South Korea's biggest business group - since his father and Samsung group boss Lee Kun-hee suffered a heart attack in 2014.
He was jailed for five years in 2017 in connection with Park's corruption scandal, but premiered a year later on appeal prior to the country's top court ordered him to face a new trial.
Samsung's overall turnover is equivalent to a fifth of the national gross domestic product, so that it is essential to South Korea's economic health.
The company reported a slight fall in first-quarter net profit at 4.88 trillion won (US$4 billion), citing impact of the coronavirus pandemic.
But Samsung - which saw procedures suspended at 11 overseas assembly lines - has warned of further falls to come as consumer demand is "significantly" hit by the condition.
Source:
TAG(s):