SEOUL — Samsung Electronics Vice Chairman Lee Jae-yong was indicted on Tuesday on fees of inventory market manipulation and breach of belief that allegedly occurred 5 years in the past. The fees solid a cloud over the management of the world’s largest smartphone maker because it makes an attempt to navigate geopolitical tensions and a pandemic.
The prosecution stated the 52-year-old inheritor to the Samsung enterprise empire was concerned in manipulating inventory costs of Samsung C&T and Cheil Industries when the 2 firms merged in 2015.
“[Lee] tried to safe his succession with the minimal price, strengthening his management,” stated Lee Bok-hyun, a senior prosecutor on the Seoul Central Prosecutors’ Workplace. “We determined to indict him contemplating the importance of his crime in disturbing the capital market.”
The prosecutor additionally stated that Lee permitted accounting fraud at Samsung Biologics, a drugmaking subsidiary of Samsung C&T, as a part of a plan to strengthen his grip on the conglomerate. Lee is the most important shareholder in Samsung C&T, the de facto holding firm of the Samsung group, with a 17.33% stake.
The prosecution didn’t, nonetheless, search an arrest warrant for Lee this time, which implies he’ll be capable of face trial with out detention. His trial date might be set by the courtroom later. The courtroom rejected the prosecution’s earlier request to arrest him in June.
Samsung declined to touch upon the indictment.
These fees are usually not the one authorized dispute Lee is embroiled in. In 2017 he was imprisoned for bribing former South Korean President Park Geun-hye, however was launched on enchantment in February 2018 with a lowered and suspended sentence. Now, the courtroom is trying to have his sentence reassessed because the Supreme Courtroom overturned the ruling final yr. The case is pending on the Seoul Excessive Courtroom, and if the choice goes towards Lee, he may discover himself behind bars once more.
On this newest case, the prosecution spent nearly two years investigating after the Securities and Futures Fee first stated it suspected accounting fraud had taken place at Samsung Biologics. The prosecution widened its investigation into the succession technique of Samsung group final yr, saying there have been suspicions that the group’s administration had inflated the worth of Samsung Biologics to assist Lee strengthen his management of the conglomerate.
Lee and Samsung have denied the allegations, saying no any unlawful practices have been dedicated throughout the merger and Samsung Biologics adopted worldwide accounting guidelines.
The indictment comes as Samsung makes an attempt to steer its approach by means of each the coronavirus pandemic and escalating U.S.-China commerce tensions. With Washington cracking down on Huawei Applied sciences, its key rival within the smartphone and telecommunication community companies, Samsung may have an opportunity to seize market share. China, nonetheless, stays an necessary market and manufacturing base for the South Korean firm, making it necessary to keep up good relations with Beijing.
Thus far the pandemic has fueled demand for Samsung’s chips, as distant working has taken off world wide. Demand for smartphones, nonetheless, has been so weak that Huawei surpassed it in shipments within the second quarter.
The beleaguered Lee has tried to attract a line beneath the quite a few controversies at Samsung. In Might he stated that he wouldn’t let his youngsters inherit the corporate, vowing to not trigger any controversies with the succession course of anymore. He has additionally been placing a extra public face on his management, together with a go to to Samsung factories in China and showing at varied occasions at dwelling.