Samsung Boss Scores ‘Avoid Jail’ Card Over Claimed Dodgy Deal
Samsung can breathe easy today, their billionaire boss is not in the slammer.
Overnight the Seoul Central District Court rejected prosecutors’ request to arrest Samsung Group’s billionaire heir Jay Y. Lee on allegations of price manipulation and violations of auditing rules, resolving a major uncertainty hanging over the world’s largest technology manufacturer.
The failed arrest is a relief for Samsung, which last week requested an outside review panel assess the validity of a potential indictment of Lee by prosecutors, as allowed under Korean rules.
If the panel is formed, it will make an assessment and give recommendations to prosecutors in coming months. Samsung representatives were not immediately available for comment after normal business hours.
A Judge sitting alone ruled against an arrest warrant for Lee and two other former Samsung executives, claiming that despite considerable evidence obtained through their investigation, they didn’t have a valid reason to detain Lee.
Having already spent time in jail for bribery charges the latest ruling is a big victory for the co-vice chairman of Samsung Electronics who’s embroiled in an increasingly contentious dispute with South Korean prosecutors over allegations of bribery and corruption.
What prosecutors claim is that Lee and Samsung used illegal means to help him take control of a conglomerate founded by his grandfather.
Prosecutors have been looking into alleged accounting fraud at Samsung Biologics Co. and a controversial 2015 merger of two Samsung affiliates, part of a broader probe into Lee’s succession plans.
Investigators accuse Samsung of orchestrating a scheme to manipulate the value of Cheil Industries and Samsung C&T during the transaction, which they say helped the heir solidify his control of the conglomerate.
Bloomberg claimed that Samsung — the world’s largest producer of memory chips, displays and smartphones — has continued business as normal during the years-long probe and investors have been mostly unfazed.
Its shares soared during 2019 and into the first months of 2020 before the coronavirus pandemic, despite prosecutorial scrutiny and investigations into more than a hundred group officials. But Lee’s plight remains a greater concern for Samsung because his potential absence would render it more difficult to make major decisions, such as on mergers and acquisitions or extraordinary investments.
Samsung is fighting not just for Lee’s liberty, but for its corporate reputation. The allegations that it used gifts to buy government favour so one of the country’s richest men could take over his family’s company are so explosive they inflamed public opinion against major South Korean companies and shook the political balance of the nation.