Arrest Warrants for Samsung Electronics Vice Chairman Lee Jae-yong, Choi Ji-sung, and Kim Jong-jung Dismissed

High Likelihood of Referral to the Prosecution Investigation Deliberation Committee

Lee Jae-yong, Vice Chairman of Samsung Electronics, who is under prosecution investigation for allegations of unfair succession of management rights related to the merger of the former Samsung C&T and Cheil Industries, as well as allegations of accounting fraud at Samsung Biologics, is entering the courtroom to attend the warrant hearing held at the Seoul Central District Court in Seocho-gu, Seoul, on the morning of the 8th. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Choi Seok-jin] The prosecution investigating allegations related to the merger between Samsung C&T and Cheil Industries has had the arrest warrant requested for Samsung Electronics Vice Chairman Lee Jae-yong (52) dismissed on the 9th.

The arrest warrants requested for former Samsung Future Strategy Office Chief Choi Ji-sung (69) and former Future Strategy Office Strategy Team Leader Kim Jong-joong (64), who were also subject to arrest warrants along with Vice Chairman Lee, were likewise dismissed.

With all three arrest warrants requested by the prosecution being dismissed, a reexamination of the prosecution’s legal framework regarding Samsung BioLogics’ (Samsung Bio) accounting fraud and fraudulent transactions during the merger process between the two companies has become necessary.

Won Jeong-sook, the presiding judge in charge of warrants at the Seoul Central District Court, conducted the pre-arrest detention hearing (warrant substantive examination) for Vice Chairman Lee and dismissed the arrest warrant around 2 a.m. that day.

Judge Won stated, "The basic facts have been established, and it appears that the prosecution has already secured a considerable amount of evidence through its investigation."

She added, "However, there is insufficient evidence to justify the necessity and appropriateness of detaining the suspects in violation of the principle of non-detention," and explained the reason for dismissal, saying, "Considering the importance of this case, it is appropriate to determine the suspects’ responsibility and degree thereof through sufficient debate and examination during the trial process."

Following the court’s dismissal of the warrants, Vice Chairman Lee and others, who had been awaiting the warrant results at Seoul Detention Center, are expected to be released soon.

The substantive examination for Vice Chairman Lee, which began at 10:30 a.m. the previous day, lasted about 8 hours and 30 minutes until around 7 p.m. the same day.

Vice Chairman Lee waited until the questioning of former Chief Choi and former Team Leader Kim was completed, then was transported together to Seoul Detention Center around 9:20 p.m. the previous day.

As when he appeared at the court for the warrant hearing in the morning, Vice Chairman Lee did not respond to any questions from the press and left the court silently.

The Seoul Central District Prosecutors’ Office Economic Crime Division (Chief Prosecutor Lee Bok-hyun), which has been investigating this case, filed arrest warrants on the 4th against Vice Chairman Lee, former Chief Choi, and former Team Leader Kim for violations of the Capital Markets Act (fraudulent trading and market manipulation) and the Act on External Audit of Stock Companies. Former President Kim was also charged with perjury.

The prosecution views the 2015 merger between Samsung C&T and Cheil Industries as a process for Vice Chairman Lee’s stable succession of management rights, during which illegal market manipulation and accounting fraud at Samsung Bio were carried out under the leadership of the group’s top executives.

On the other hand, Samsung has stated that the merger between the two companies was conducted legally in accordance with relevant laws, and that Samsung Bio’s accounting treatment is not problematic from the perspective of international accounting standards.

During the warrant hearing, the prosecution reportedly argued that the allegations of market manipulation, fraudulent transactions, and accounting fraud involving Vice Chairman Lee during the management succession process constitute the "largest financial crime in history," and emphasized the need for detention investigation given the gravity of the crime.

The prosecution is said to have presented physical evidence, including the so-called "Project G," which contains plans for the entire management succession operation of the former Future Strategy Office, to prove that Vice Chairman Lee was informed of these series of processes.

In particular, it is reported that the prosecution presented circumstances showing that Vice Chairman Lee personally met with Warren Buffett, chairman of Berkshire Hathaway, known as the "investment genius," to discuss the sale of Samsung Life Insurance shares to secure funds for inheritance tax.

Vice Chairman Lee’s side reportedly rebutted that all the alleged criminal charges claimed by the prosecution are legally unfounded and that there is no risk of evidence destruction.

They especially emphasized that, since most evidence has already been collected through a long investigation lasting one year and seven months, there is no concern about evidence tampering.

The prosecution deployed eight prosecutors from the investigation team, including Chief Prosecutor Lee Bok-hyun, Deputy Chief Prosecutor Choi Jae-hoon of the Economic Crime Division at Seoul Central District Prosecutors’ Office, and Kim Young-chul, head of the Criminal Division 4 at Uijeongbu District Prosecutors’ Office, for the hearing.

Samsung’s defense team, consisting of nearly ten lawyers mainly including former judges such as Han Seung (57, Judicial Research and Training Institute class 17), who served as Director of Judicial Policy at the Court Administration Office and as Chief Judge of Jeonju District Court, took charge of the defense.

The prosecution is expected to decide whether to reapply for the warrant for Vice Chairman Lee or to indict him without detention after reviewing the court’s reasons for dismissing the warrant.

Meanwhile, with the dismissal of the arrest warrants requested by the prosecution, the prosecution’s Investigation Review Committee (Investigation Review Board), which Samsung requested to convene to "judge the appropriateness of prosecution," is expected to attract attention.

The Seoul Central District Prosecutors’ Office plans to hold a referral review committee on the 11th to discuss referring Vice Chairman Lee’s case to the Investigation Review Board.

The referral review committee, composed of 15 Seoul Central District Prosecutors’ Office citizen prosecutors, reviews whether to refer the case to the Investigation Review Board based on written opinions submitted by the lead prosecutor and the suspect and other related parties.

If a majority of the referral review committee members attending the closed session agree to refer the case to the Investigation Review Board, a request for convening the board is sent to the Prosecutor General.

Subsequently, the current affairs committee, composed of 15 members, deliberates on the matter with at least 10 members participating, then drafts a review opinion on the results and sends it to the lead prosecutor.

According to related guidelines, the lead prosecutor "must respect the review opinion of the current affairs committee," so although the opinion is not binding, the investigation team will inevitably face pressure if it takes actions contrary to the Investigation Review Board’s opinion.

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