According to Korean media reports, on September 1, local time, the Seoul Central District Prosecutor's Office (hereinafter referred to as the "Seoul District Inspection") formally sued Samsung Electronics' vice chairman and head of Samsung Group Lee Jae-yong, accusing him of suspected stock manipulation, Violation of the Capital Market Law and external auditing, breach of trust, and accounting fraud during Samsung BioLogics Co Ltd (Samsung BioLogics Co Ltd, hereinafter referred to as "Samsung Bio") IPO, thus creating a favorable environment for Lee Jae-yong to succeed Samsung Group.
This is also since February 2017, after being prosecuted for illegal bribery during the scandal of former South Korean President Park Geun-hye's "girlfriends' involvement in politics", it has been involved in the lawsuit again after three and a half years.
In addition to Li Zayong himself, another 10 former and current senior executives of Samsung have also been prosecuted for similar charges.
According to the information learned by the CBN reporter from the Seoul local inspection, the prosecutor stated in the indictment that Lee Jae-yong was involved in the 2015 merger of Samsung C&T and Cheil Industries, a subsidiary of Samsung Group, and he did not hesitate to do so. The devaluation of assets caused by fraudulent accounting has created a favorable environment for Li Zairong’s succession and harmed the legitimate interests of investors.
Among them, the key content of the prosecution's allegations is that in order to successfully complete the merger, Lee Jae-yong was accused of deliberately increasing the value of the shares of Samsung Bioepis, a subsidiary of Samsung Bioepis, before Samsung Biologics implemented a US$2 billion IPO in 2016.
According to the 2016 Samsung Group Holdings data, Daiichi Woolen holds 46% of Samsung Bio.
As a result, the prosecutors argued that in order to successfully complete the merger between Samsung C&T and Cheil Industries, Lee Jae-yong raised the valuation of Samsung Bio, thereby increasing the valuation of Lee Jae-yong’s assets and helping two of Samsung Group’s subsidiaries The amount of alleged fraudulent accounting for the merger of core companies is approximately 4.5 trillion won.
Regarding the above allegations, a reporter from China Business News contacted Samsung Electronics, and the other party only stated in a statement that it would fully respond to the lawsuit in order to safeguard legal rights; but an executive from Samsung Electronics presupposes personal opinions , Told a reporter from China Business News, "Under the background of the recurrence of the epidemic, the continuing trade dispute between South Korea and Japan, and the unstable economic and trade situation, we are very shocked and very regretful that the prosecutors made such a decision."
Professor Li Guoxian from Korea University’s School of Political Science and Economics told Yicai.com reporters, “The reason for the prosecution in this indictment is essentially the same as that in February 2017. The prosecution’s focus It was all related to the smooth completion of Li Zayong's succession, but the main focus at the time was illegal bribery, but this time the focus shifted to accounting violations."
In 2016, due to the scandal of former South Korean President Park Geun-hye’s “girlfriends doing politics”, the special inspection team proposed that Lee Jae-yong donated to the consortium controlled by Choi Sun-sil in order to obtain convenience in the process of inheriting Samsung. The charges were prosecuted and sentenced to fixed-term imprisonment in the first instance, but was released on probation in the subsequent second instance.
Since then, the Special Monitoring Team of the South Korean Supreme Procuratorate investigating the Lee Jae-yong case appealed to the Supreme Court of South Korea (Grand Court) and is currently awaiting the Supreme Court’s ruling.
In this context, in January this year, the "Samsung Compliance Supervision Committee" composed of former justices, legal experts and scholars was formally established, and the "Investigation and Deliberation Committee", an independent institution under the Supreme People’s Procuratorate, was asked to discuss whether the Lee Jae-yong case should be Prosecution is reviewed.
Li Guoxian believes that the reason why the prosecutors have been holding on to the merger of Samsung C&T and Cheil Industries is mainly due to the extraordinary position of Samsung C&T in the Samsung holding system.
According to the holding structure chart released by Samsung Electronics at the end of 2018, Samsung C&T holds a total of 19.47% of Samsung Life Insurance. The former holds the status of a major shareholder in the latter; Samsung Life Insurance holds 8.51% of Samsung Electronics’ shares. Second only to the 11% shares held by the Korean National Pension Fund (National Pension Fund), it ranks the second largest shareholder; if the shares of Lee Jianxi, Lee Jae-yong and his sons are included, the Samsung family holds 21% of Samsung Electronics' shares.
"The reason why Samsung Electronics has adopted such a complicated form of shareholding is mainly because the South Korean chaebol adopts a'circular capital contribution' model, that is, one holding one holding one, and the company at the top of the holding chain controls the remaining subsidiaries. This model It is conducive to reducing the holding cost of the head family, but it also has the characteristics that the holding structure is easily shaken by capital." Li Guoxian said that in Samsung’s holding structure, Samsung C&T is the pinnacle of the Samsung Group’s holding structure, and Samsung C&T’s major shareholder It is Li Jianxi, so the prosecution will suspect that Li Zaiyong will increase the valuation of the first woollen company that he controls to complete the merger under more favorable conditions.
Park Chang Min, a South Korean lawyer who mainly studies corporate law, analyzed to a reporter from China Business News that among some of the allegations involving Lee Jae-yong, the most core and the highest sentencing allegation is whether it is for the purpose of successfully completing the inheritance. Illegal measures were adopted, which is closely related to the collection of inheritance taxes of up to 40-50% in Korea.
However, a Korean insider close to Samsung Electronics told CBN reporters that since the outbreak of the case in 2017, the prosecutors have been summoning and investigating. Samsung’s subsidiaries and department offices have been searched for more than 50%. Yu times involved an investigation of nearly 110 former or current Samsung employees, which not only caused dissatisfaction within Samsung that it was "targeted at specific companies," but it was also "unparalleled" in Korean judicial history.
On the 6th, Lee Jae-yong, vice chairman of South Korea’s Samsung Electronics and the actual controller of the group, held a press conference and said that many external disputes about Samsung stemmed from inheritance matters. From now on, he will invest all his energy in improving the company. In terms of the value of the company, he promised that he would not cause disputes due to the issue of heirs. “I will make it clear that I have no plan to hand over the management rights of the company to my children.” In the subsequent “Investigation Committee”, 10 of the 13 members A committee member suggested that South Korean prosecutors say that Lee Jae-yong “should not be prosecuted”.
The above-mentioned person familiar with the matter mentioned that even in cases involving chaebol executives, South Korean prosecutors have delayed for nearly two years, and South Korea’s Supreme Prosecutor’s Investigation and Review Committee has also given a “stop investigation” opinion, although this opinion is not mandatory. Sexuality, but it is rare for the Seoul Metropolitan Government to ignore the recommendations.
It is worth noting that compared with the previous charges that Li Zairong was imprisoned, the prosecution’s indictment did not require the arrest of Li Zairong. The above-mentioned persons also believe that because Li Zairong was not arrested, the short-term In terms of the overall impact on Lee Jae-yong and Samsung, "However, since similar lawsuits may last up to five years or even longer, Samsung Electronics currently faces important competition in major businesses such as chips and power batteries. Therefore, the continuation of the trial does not rule out that it will affect the South Korean chaebol's unique advantage of faster decision-making."
Lee Kuo-hyun believes that during the "girlfriends' political affairs" scandal, the Korean people protested against Park Geun-hye. Slogans such as "liquidate the chaebol" and "trial Samsung" appeared many times, reflecting the dissatisfaction of the Korean people with the current chaebol system. In the years after Rong took office, compared with the previous Samsung, his investment in social participation and image was more specific, and he began to pay more attention to the image of the company in society. This is also the South Korean chaebol's attempt to gradually step out of "collusion between politics and business." The self-salvation of negative images
Author: Right Little Star