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South Korea seeks arrest of Samsung’s de facto boss

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South Korean prosecutors have confirmed that they have filed an arrest warrant for Samsung vice chairman Lee Jae-yong, as part of an investigation into alleged fraud committed to clear Lee’s path to succeed his father as chairman.

Lee has been widely considered de facto head of Samsung since his father suffered a heart attack in May 2014. Samsung has been controlled by the Lee family since its immediate predecessor was founded by Lee Byong-chul (Lee Jae-yong’s grandfather) in 1938.

In January 2017, Lee was arrested and charged with bribery in association with an explosive political scandal which ousted the former President and landed her – along with many other high-profile figures – with decades-long prison sentences. Although the bribery case was suspended, Lee was found guilty of corruption. His five-year custodial sentence was quickly suspended and reduced to three years by an appeals court, allowing him to return to normal life after just one year in custody.

In August 2019, the Supreme Court overturned the appeals court ruling. This raised concerns that Lee was facing a far lengthier prison sentence and forced Lee to make a rare public statement to offer a partial apology in a bid to assuage the courts.

Now, South Korean prosecutors have confirmed that they have filed an arrest warrant for Lee and two other former Samsung executives, as part of their investigation into alleged fraud relating to a controversial merger between two Samsung units: Samsung C&T and Cheil Industries. They will pursue his arrest on suspicion of stock price manipulation, audit rule violations and other offences.

Specifically, it is alleged that the value of Cheil Industires was deliberately inflated before its merger with Samsung C&T, making Lee (as the largest shareholder of Cheil Industries) the largest shareholder of Samsung C&T and clearing the path for him to succeed his father as Samsung Group Chairman.

Lee is also alleged to have bribed the former President – now imprisoned for bribery, abuse of power and embezzlement – in order to secure government support for the merger.

The Seoul Central District Court will review the request next week. If arrested, Lee is likely to return to jail to serve the remaining two years of his suspended sentence.

Lee has previously denied the accusations made against him. His representatives have expressed “deep regret” at the prosecutors actions and said that Lee has fully cooperated with investigations.

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