Court rejects arrest warrant for Samsung heir Lee Jae-yong

A Seoul court rejected Tuesday the arrest warrant for Samsung heir Lee Jae-yong over the succession probe.

The Seoul Central District Court turned down the prosecution's request to arrest Lee, vice chairman of Samsung Electronics, saying that there is not sufficient probable cause for his arrest.

At a court hearing Monday, Lee tried his best to avoid another arrest over alleged corporate fraud surrounding a 2015 merger between two key affiliates.

Arriving at the Seoul Central District Court at 10:30 a.m. for the arrest warrant hearing, the heir apparent of Samsung Group went into the courtroom straight away, without answering questions from reporters on whether he directed company officials to proceed with the controversial tie-up.

Two ex-executives of Samsung Group -- Choi Ji-sung and Kim Jong-joong -- who had led the now-dissolved control tower, Future Strategy Office, also attended the hearing as the prosecution is seeking to arrest them along with Lee. Choi and Kim also avoided the arrest.

The prosecution suspects the office had been deeply involved in the merger of Samsung C&T and Cheil Industries, which invited an array of controversies due to suspicious financial procedures.

Prosecutors believe that the merger and the entire process yielded results that aided the heir apparent’s succession plans by raising his stake in Samsung C&T, which is at the heart of a cross-shareholding structure to consolidate his grip on Samsung Electronics.

They suspect the conglomerate systematically conducted window dressing and deliberately delayed disclosures to help Lee to obtain the most favorable terms in the merger deal.

To prove Lee’s wrongdoings, prosecutors have created a 200,000-page investigative report consisted of witness testimonies and data secured through raids during their 20-monthlong probe.

Considering the seriousness of the issue and concerns that Lee could destroy evidence, the Seoul Central District Prosecutors’ Office filed for arrest warrants against him and the two former officials on charges of violating the Financial Investment Services and Capital Markets Act on illegal transactions, market manipulation and the Act on External Audit of Stock Companies last week.

Lee’s lawyers and the company have been asserting that the merger was proceeded in a proper and legitimate manner and that he was neither informed nor did he direct illegal activities. They pointed out that the prosecution is being excessive in seeking his arrest without convincing reasons.

In a statement released Sunday, Samsung stressed the need for normalization of its operations to give an impetus to the Korean economy, implying that the leadership void during Lee’s one-year imprisonment between 2017 and 2018 hindered the conglomerate’s growth.

Until the court announces its decision, which is expected to come out late in the day or early Tuesday, Lee is required to stay at the Seoul Detention Center, in Uiwang, Gyeonggi Province.

If a warrant is issued, he will be put behind bars while undergoing further questioning before trial, failing which he will be immediately released.

Lawyers for a Democratic Society, an organization of progressive lawyers, said Monday stern punishment appears to be inevitable for Lee as “the crime was motivated by his greed to reduce funds needed for managerial succession.”

Separately, the Seoul Central District Prosecutors’ Office said Monday it will hold a meeting Thursday with 15 citizens to discuss whether it should refer Lee’s case to an external investigation panel committee to determine the validity of his indictment.

Lawyers of Lee and other former executive Kim requested the prosecution to convene a committee of outside experts on June 2. A decision from the legal experts, however, is an advisory opinion which doesn’t carry the force of law.

Meanwhile, a separate trial of Lee is ongoing for providing bribes to a friend of former President Park Geun-hye after the Supreme Court ruled that an appeals court, which reduced his sentence to 2 1/2 years from initial five years, had underestimated the value of the bribes, and sent the case back to the lower court for retrial.

By Park Han-na (hnpark@heraldcorp.com)