Samsung’s J.Y. Lee Faces New Charges

Mr. Lee holds the position of vice chairman at Samsung. The company is ingrained in the everyday life of South Korea through a sprawling array of businesses that include electronics, financial services, heavy manufacturing and more. His family controls Samsung through a series of legal and financial arrangements among the conglomerate’s many arms.

On Tuesday, prosecutors formally indicted Mr. Lee again on criminal charges stemming from a merger of two Samsung affiliates in 2015 that helped him increase his control over the entire Samsung empire, including its crown jewel, Samsung Electronics.

Prosecutors also indicted 10 other current and former Samsung officials, including former top executives Choi Gee-sung and Kim Jong-joong, who were also accused of engaging in stock-price manipulation, unfair trading and audit-rule violations as part of a systematic effort to help transfer the managerial control of Samsung from Mr. Lee’s father to his son, now 52.

Such efforts culminated in the 2015 merger of the two Samsung affiliates, Samsung C&T and Cheil Industries Inc., prosecutors said.

According to prosecutors, Mr. Lee and his lieutenants conspired to lower the value of Samsung C&T and inflate that of Cheil Industries ahead of their merger. As part of their plot, prosecutors said, the Samsung executives were also committed accounting fraud to inflate the value of Samsung Biologics, a subsidiary of Cheil Industries.

In the 2015 merger, one share of Cheil Industries was traded for about three shares of Samsung C&T. The deal helped Mr. Lee enormously, prosecutors say.

Before the merger, Mr. Lee was the largest shareholder of Cheil Industries, with a nearly one-quarter ownership stake. He owned no share of Samsung C&T. The inflated value of Cheil Industries gave Mr. Lee a bigger share in the company created through the merger than prosecutors said he deserved. The company created through the merger, also named Samsung C&T, is a linchpin in controlling the entire conglomerate.

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