On Monday, Samsung Group Vice President Jay Y. Lee appeared in a court in South Korea over charges that included accounting fraud and stock manipulation. Last week, prosecutors in the case asked for the arrest of Lee, who is two years free.
The charges are the result of an investigation into a merger between Samsung C&T and Cheil Industries in 2015, two affiliates of the conglomerate. The new allegations say the vice president was involved in illegal transactions and manipulation of shares.
In 2017, Lee was arrested for bribing the government to support the merger. On the occasion, he presented the daughter of a confidante to the former President of South Korea, Park Geun-hye. The executive was released a year later.
According to some critics, minority investors were against the merger, which was seen as a strategy by the executive to increase his control over the conglomerate.
In a statement this Friday (05), Samsung denied Lee’s participation in the manipulation of shares, on the grounds that his involvement in decision-making “goes against common sense”.
The company also said that the lengthy investigation into Jay Y. Lee is negatively impacting the management of the conglomerate, which represents about 12% of GDP in South Korea. The statement also said that the group is in “crisis” due to the covid-19 and trade disputes between the United States and China.
However, according to fund manager at HDC Asset Management, “Samsung is unlikely to be in trouble, even in the absence of Lee. But the case rekindles governance concerns in South Korean conglomerates and investors are fed up with these controversies.” .