South Korean prosecutors have summoned Samsung Electronics vice chairman Jay Y Lee for questioning in an ongoing investigation into alleged accounting fraud and a controversial 2015 merger of two Samsung affiliates, dealing the latest legal blow to the country’s largest corporation.
The Seoul central district prosecutors office called in Lee, the de facto leader of the Samsung Group conglomerate, at 8am local time on Tuesday in relation to allegations over illegal acts in succession plans, the Yonhap News Agency reported. The summons came after the billionaire heir publicly apologised over the company’s role in scandals over his succession, which eventually led to the impeachment of former president Park Geun-hye and a year’s imprisonment for Lee. A spokesman at the prosecutors office confirmed the executive has been summoned, without elaborating.
Prosecutors are expected to ask the Samsung scion whether there were illegal acts during the merger between Samsung C&T and Cheil Industries, regarded as an effort to cement Lee’s control over the conglomerate. They’re also likely to interrogate the heir about allegations of financial fraud at Samsung Biologics. A Samsung Electronics spokeswoman didn’t have immediate comment when contacted.
Samsung Group, South Korea’s largest conglomerate grouping more than US$400-billion of market value, has grappled with legal issues for years. Dozens of current and former executives have been questioned, indicted or arrested over charges that range from graft and accounting issues to union-busting. Lee himself has been entangled in allegations that he bribed the former president to win government favour for his succession as Samsung chief.
The prosecutors’ probe — which is separate from an ongoing bribery trial — kicked off after the country’s Financial Services Commission in 2018 said the biotechnology unit “intentionally” violated accounting rules surrounding an initial public offering. The regulator said at the time the unit deliberately overstated the value of affiliate Samsung Bioepis ahead of its 2016 IPO. Critics argued that Samsung Group orchestrated the accounting change to benefit the merger of Samsung C&T and Cheil Industries, which made Lee the largest shareholder at Samsung’s de facto holding company.
Samsung Biologics has denied the allegations and said its books were examined by external accounting firms, and that it had no impact on the 2015 merger as that was completed before the bio firm’s accounting change. — Reported by Sohee Kim, (c) NewsCentral Media