The End Point of the 'Samsung Succession Investigation'... 3 More Years if Indicted

Vice Chairman Lee Jae-yong of Samsung Electronics, who returned home after visiting a semiconductor factory in Xi'an, China on the 19th. [Image source=Yonhap News]

[Asia Economy Reporters Seokjin Choi and Hyewon Kim] The "battle of the century" between the special prosecution team and Samsung Group is approaching its conclusion. Looking back, it has been four years since the impeachment phase of the Park Geun-hye administration and one and a half years since the investigation into the accounting irregularities at Samsung Biologics.

The prosecution summoned Samsung Electronics Vice Chairman Lee Jae-yong and conducted a 17-hour investigation to solidify the charges in the final stage, but Lee completely denied the allegations. Having failed to deliver a decisive blow during the first summons, the prosecution is expected to summon Lee again before deciding on his detention or indictment.

The decision on whether to indict Vice Chairman Lee, which could come as early as next month, will also indirectly affect the final ruling on the "state manipulation bribery case," which is currently at the Supreme Court’s remand trial stage.

Inside and outside Samsung, it is noted that Lee has been summoned for questioning nine times since 2016, and over 100 Samsung executives and employees have faced prosecution, urging a swift end to the judicial risks entering their fifth year.

◆ One investigation into Samsung Biologics may not be enough for Vice Chairman Lee = The key point to watch is whether the prosecution can prove the charges based solely on the physical evidence and witness testimonies it has secured, given that Lee denies the related allegations.

According to the prosecution on the 27th, Lee, summoned as a suspect in connection with the Samsung Biologics accounting fraud allegations, finished his investigation around 1:30 a.m. the following day and returned home. The investigation, which began at 8:30 a.m. the previous day, ended around 9 p.m., but Lee’s side reportedly spent more than four hours reviewing the interrogation records, resulting in the late return home.

The prosecution focused on whether Lee gave instructions or tacit approval for a series of illegal actions, including accounting fraud during the 2015 merger of Samsung C&T and Cheil Industries. However, Lee reportedly denied all allegations, stating he had "no knowledge of or involvement in any reports or instructions."

The prosecution is expected to summon Lee one or two more times. A prosecution official said, "After a comprehensive review of the statements made yesterday, the investigation team will decide whether further questioning is necessary or if there are remaining issues to be judged."

Whether the Samsung C&T and Cheil Industries merger was a measure for Lee’s succession of management rights, and whether Lee was aware of the Samsung Biologics accounting fraud, are linked to the bribery charges against Lee prosecuted by the Park Young-soo special prosecutor in 2017. This is because the funds given to former President Park Geun-hye and Choi Seo-won (formerly Choi Soon-sil) are related to determining whether they were illicit bribes in exchange for the "succession work."

However, considering Lee’s denial of "reports and instructions," it is anticipated that the prosecution will find it challenging to prove Lee’s charges in court based solely on internal Samsung documents and witness testimonies.

◆ If indicted over the Samsung Biologics case, a legal battle is expected until 2023 = The business community views this issue with deep concern over the "prolongation of judicial risks."

An insider familiar with the Samsung Biologics situation pointed out, "When the Financial Services Commission’s Securities and Futures Commission filed a complaint about accounting fraud at the end of 2018, it was unrelated to the Samsung C&T and Cheil Industries merger or succession issues, but during the investigation, the focus shifted to 'Lee’s succession of management rights.' It feels like the investigation has been dragged on excessively for a year and a half."

Samsung argues that despite the judicial risks, Samsung Biologics has rapidly grown into the third-largest company in Korea by market capitalization (about 42 trillion won), which itself proves consistent corporate value.

An executive from a major corporation said, "What Samsung urgently needs now is to shake off judicial risks as soon as possible, escape uncertainty, and return to normal business operations. The issues surrounding Lee and Samsung’s trials are indeed causing fatigue throughout the business community."

Although the prosecution’s investigation into management succession is nearing its end, if Lee, who was questioned for the first time over the Samsung Biologics accounting fraud case, is indicted on this charge, the legal battle is expected to continue beyond 2023.

This content was produced with the assistance of AI translation services.