Prosecutors have demanded a five-year prison sentence and a 500 million won (US$386,581) fine for Lee Jae-yong, chairman of Samsung Electronics, indicted on charges of unfairly intervening in the merger of Samsung C&T and Cheil Industries to facilitate a succession of managerial power.
At the final hearing held on Nov. 17 before the 25-2 Criminal Agreement Division of the Seoul Central District Court involving Chairman Lee and 14 others, prosecutors requested, “Please consider that defendant Lee Jae-yong is denying the charges, was the final decision-maker in this case, and has received substantial benefits.”
Choi Ji-sung, former head of Samsung’s Future Strategy Office, and Kim Jong-joong, former head of the strategy team, who were also brought to trial, were each sought to be sentenced to four years and six months in prison with 500 million won fines. Jang Choong-ki, former deputy head of the Future Strategy Office, faced a proposed sentence of three years of imprisonment and a 100 million won fine.
Chairman Lee is accused of unfairly intervening in the 2015 merger of Samsung C&T and Cheil Industries to secure stable managerial control and strengthen the group’s dominance.
The merger was conducted under the condition of exchanging one Cheil Industries share for about three Samsung C&T shares. Prosecutors believe that Lee, then vice chairman with a 23.2% stake in Cheil Industries, manipulated the merger ratio to inflate Cheil Industries’ stock price and depress Samsung C&T’s stock price, ensuring a stable acquisition of shares in Samsung C&T.
Prosecutors argue that under the guidance of Samsung Group’s Future Strategy Office, various types of malpractice were committed, including spreading false information, concealing crucial investment details, announcing false positive news, illegally lobbying to secure the approval of the National Pension Service (Samsung C&T’s largest shareholder), and manipulating the market through concentrated purchases of its own stock. Lee is alleged to have conspired in or been informed of these actions.
Additionally, Lee faces charges of involvement in the 4.5 trillion won accounting fraud following the 2015 merger linked to the change in accounting methods at Samsung BioLogics, a former subsidiary of Cheil Industries.