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Samsung chairman Lee Jae-yong might have to head back to prison again. South Korean prosecutors have demanded a five-year jail term for the Samsung chief in connection to the controversial merger of two company affiliates in 2015. He previously went to jail twice in a separate bribery case involving former South Korean President Park Geun-hye.
Legal troubles for Samsung chief Lee Jae-yong haven’t ended yet
Samsung completed a high-profile merger of its affiliates Samsung C&T and Cheil Industries in 2015. Since Lee had a 23.2 percent stake in the latter, the $8 billion merger—where three Samsung C&T shares were offered for one Cheil share—helped him tighten his control of the merged entity. Effectively, Lee made a strong case for himself to succeed his father as the leader of the family-controlled conglomerate, the Samsung Group.
However, the state prosecution accused Lee of stock price manipulation and accounting fraud to help facilitate the merger (via Yonhap). He allegedly inflated the prices of Cheil and deflated the prices of Samsung C&T through unfair and illegal practices. The Samsung chief is suspected of having disseminated false market information and mass purchasing stocks among other unlawful actions.
Prosecutors have also accused him of accounting fraud at Samsung Biologics, a subsidiary of Cheil Industries. His actions, particularly the devaluation of Samsung C&T, resulted in massive financial losses to other investors. Since Lee was the final decision-maker (he was leading the company after his father suffered a heart attack the previous year), he allegedly approved all the malpractices for his benefit.
The prosecution demanded a five-year jail term and a fine of KRW 500 million (approx. USD 386,000) for Lee in the case. Prosecutors have also demanded a 4.5-year prison sentence and a similar fine for two senior Samsung executives on related charges. Choi Gee-sung, a former head of the Korean conglomerate’s now-disbanded control tower Future Strategy Office, is one of them.
The court will announce its ruling next year
Lee Jae-yong and the two Samsung executives were indicted in this case in September 2020. Following years of hearings where the accused denied wrongdoing, prosecutors finally presented a sentence request during the final hearing held at the Seoul Central District Court earlier today. Lee attended the hearing, with his lawyers expected to present their final arguments in his defense later today.
The court may not announce its ruling in the case before 2024. If it finds Lee guilty on one or more accounts, he may have to head back to prison less than two years after receiving a presidential pardon in the aforementioned bribery case. He spent more than a year in jail between 2017 and 2021 before walking out on parole and eventually receiving a pardon. Time will tell if the Samsung chief will manage to avoid a third term in jail.