Samsung heir charged with fraud over succession-linked deal

Lee Jae-yong was jailed in 2017 after being found guilty of crimes linked to ex-South Korean president Park Geun-hye. (AP pic)

SEOUL: South Korean prosecutors indicted the heir to the Samsung empire Tuesday over a controversial merger of two business units seen as a key step towards his succession, in the latest legal blow to the sprawling conglomerate.

Lee Jae-yong, vice-chairman of Samsung Electronics, committed stock manipulation, breach of trust and other offences when two other subsidiaries, Samsung C&T and Cheil Industries, merged in 2015, the prosecutors said.

Ten other current and former top Samsung executives were also charged.

Lee and his subordinates had carried out “a systemic scheme to take control of the Samsung Group with the least cost”, said the prosecution, by deploying “various unfair transactions”.

Lee is already separately being re-tried on charges of bribery, embezzlement and other offences in connection with the corruption scandal that brought down former South Korean President Park Geun-hye.

The businessman was not detained, but the charges are likely to prove a distraction as his firm seeks to navigate the effects of the coronavirus pandemic.

Samsung Electronics is the flagship subsidiary of the group, which was founded by Lee’s grandfather and has grown to become by far the biggest of the family-controlled conglomerates, or chaebols, that dominate business in the world’s 12th-largest economy.

Its overall turnover is equivalent to a fifth of South Korea’s gross domestic product and is crucial to the country’s economic health.

The firm saw profits rise in April-July with data centres moving to stockpile its DRAM chips to meet surging demand for online activities as a result of global lockdowns.

But the South’s economy shrank 3.2% year-on-year in the same period, according to a revised estimate by the central Bank of Korea on Tuesday.

Lee was jailed for five years in 2017 after being found guilty of bribery and other offences linked to former president Park, before being cleared on appeal and released a year later. That case is currently being retried.

Lee apologised in May over the issues, pledging to ensure “there will be no more controversy over the succession” and that he would not allow his children to take over from him at the firm.

“Our technology and products are being hailed as first-class but the public gaze towards Samsung still remains harsh,” he said, bowing to the cameras. “This is my fault. I apologise.”