Samsung Heir Charged with Fraud Over Controversial Succession Deal

SEOUL, KOMPAS.com – Samsung heir Lee Jae-yong was indicted Tuesday after South Korean prosecutors found him guilty of accounting fraud and stock price manipulation.

His case pertains to a controversial merger of two business units in 2015 that was viewed as a key step towards the heir to the Samsung empire's succession.

The indictment is the latest legal blow to the South Korean conglomerate.

Lee Jae-yong, vice chairman of Samsung Electronics, committed stock manipulation, breach of trust, and other offenses when two other subsidiaries, Samsung C&T and Cheil Industries, merged in 2015, the prosecutors said.

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

Lee and his subordinates had carried out "a systemic scheme to take control of the Samsung Group with the least cost", said the prosecution, by deploying "various unfair transactions" that damaged other shareholders' interests.

Lee is already separately being retried on charges of bribery, embezzlement, and other offenses in connection with the corruption scandal that brought down former South Korean president Park Geun-hye.

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The businessman was not detained, but the charges are likely to prove a distraction as his firm seeks to navigate the effects of the coronavirus pandemic.

Samsung Electronics is the flagship subsidiary of the group, which was founded by Lee's grandfather and has grown to become by far the biggest of the family-controlled conglomerates, or chaebols, that dominate business in the world's 12th-largest economy.

Its overall turnover is equivalent to a fifth of South Korea's gross domestic product and is crucial to the country's economic health.

The firm saw profits rise in April-July with data centers moving to stockpile its DRAM chips to meet surging demand for online activities as a result of global lockdowns.

But the South's economy shrank 3.2 percent year-on-year in the same period, according to a revised estimate by the Central Bank of Korea on Tuesday.

Lee's legal team rejected the charges, calling them "one-sided allegations" by the investigators and "totally untrue".