Jail sought for Samsung boss over fraud, stock manipulation

FILE PHOTO: Samsung Electronics Vice Chairman Jay Y. Lee arrives at a court in Seoul, South Korea, October 26, 2021. REUTERS/Kim Hong-Ji/File Photo

SEOUL — South Korean prosecutors on Friday sought a five-year jail term for the boss of Samsung Electronics Jay Y. Lee over charges of accounting fraud and stock price manipulation involving an $8 billion merger of Samsung affiliates in 2015.

Lee has denied any wrongdoing. The hearing is the final lower court session before a ruling, which is expected within months, ending a trial that has lasted three years.

The case is the last against Lee, who was pardoned for an earlier, separate conviction and cemented last year his leadership position at Samsung as executive chairman.

During Friday’s hearing, prosecutors told the Seoul Central District Court that Lee, 55, and other former executives had violated the Capital Markets Act to make possible the 2015 merger that helped Lee assume greater control of the group’s flagship Samsung Electronics.

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Prosecutors alleged the executives’ involvement in the merger of group affiliates Samsung C&T and Cheil Industries included stock price manipulation and other wrongdoings that helped them gain at the expense of minority investors.

“The defendants undermined the foundation of the capital market to ease the leader’s succession,” the prosecution said.

“They abused the authority granted by the company and shareholders for the private interests of the group leader and abused extreme imbalance of information.”

Lee and the executives have denied wrongdoing, saying the merger and accounting processes that prosecutors have taken issue with were part of normal management activities. The defendants’ final arguments will be heard later on Friday, November 17.

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Lee attended the hearing on Friday. A small group of supporters chanted his name outside the court during a recess, while detractors yelled angrily at him.

Analysts said depending on the verdict, Lee will find it easier or more difficult to shape the future of Samsung Electronics and its affiliates. An acquittal would give him more room to pursue major strategic decisions, particularly in mergers and acquisitions.

Lee was earlier convicted of bribing former South Korean President Park Geun-hye and went to jail for a total of 18 months from 2017 to 2021. He was subsequently paroled in 2021 and pardoned in 2022.