Arrest warrant sought for Samsung heir over 2015 merger

Prosecutors on Thursday sought an arrest warrant for Samsung Electronics Vice Chairman Lee Jae-yong as part of an investigation into the merger in 2015 of two key affiliates of the conglomerate.

The Seoul Central District Prosecutors’ Office filed for warrants to arrest Lee, widely perceived as the de facto chief of the Samsung Group, and two former top executives, Choi Gee-sung and Kim Jong-joong, from the group’s now-disbanded control tower, the Future Strategy Office.

A court hearing will be held at 10:30 a.m. Monday at the Seoul Central District Court to decide on the matter.

It came two days after Lee and Kim sought an outside review of the prosecution’s sweeping investigation, which has engulfed the nation’s largest conglomerate for nearly 18 months.

Samsung’s lawyers expressed strong regret over the prosecution’s action, saying it “undermines” the rights of their clients to seek an objective oversight of the prosecutorial investigation.

The prosecution review body, currently headed by former Supreme Court Chief Justice Yang Chang-gu, reviews whether certain investigations should continue, and the legitimacy of indictments or requests for court warrants.

The prosecution introduced the external review system in 2018 as part of reform measures to prevent abuse of power.

The Samsung trio are suspected of intentionally inflating the value of Cheil Industries and lowering that of Samsung C&T ahead of their merger in 2015, which prosecutors see as a step for the transfer of power from his ailing father, Samsung Group Chairman Lee Kun-hee.

By lowering the valuation of Samsung C&T, as the largest shareholder in Cheil Industries with a stake of 23.2 percent at the time, Lee gained an advantage in the merger ratio. The merger consolidated his control over the group.

Lee was called in for questioning twice last week. He is said to have denied all the allegations.

The prosecution is also looking into alleged accounting fraud by Samsung Biologics, a subsidiary of Cheil Industries.

By Ock Hyun-ju (laeticia.ock@heraldcorp.com)