Court Rejects Arrest Warrant for Vice Chairman Lee Jae-yong... Prosecutor's Investigation Deliberation Committee's Review Gains Importance

On the 11th, the Subcommittee on Referral Likely to Approve Referral
Prosecutors at a Crossroads Between 'Re-requesting Warrants and Indicting Without Detention'

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 accounting fraud allegations involving 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 Jinhyung Kang aymsdream@

[Asia Economy Reporter Choi Seok-jin] The prosecution investigating allegations related to the merger between Samsung C&T and Cheil Industries faced an inevitable setback in its investigation as the arrest warrants requested for Samsung Electronics Vice Chairman Lee Jae-yong (52), former Samsung Future Strategy Office Chief Choi Ji-sung (69), and former Future Strategy Office Strategy Team Leader Kim Jong-joong (64) were all dismissed on the 9th.

Since the arrest warrants for not only Vice Chairman Lee, who has denied the charges claiming he "never gave instructions or received reports," but also for former Chief Choi and former Team Leader Kim were dismissed, a comprehensive reexamination of the prosecution's legal theory that fraudulent unfair trading and market manipulation occurred during the merger process of the two companies has become necessary.

The prosecution is expected to review the court's reasons for dismissing the warrants and decide whether to reapply for the warrants against Vice Chairman Lee and others or to indict them without detention.

Notably, the presiding judge for the pre-arrest detention hearing (warrant substantive examination), Chief Judge Won Jeong-sook of the Seoul Central District Court, who conducted the hearing for Vice Chairman Lee and others, stated that "the basic facts have been established," but also noted that "there is insufficient evidence to justify the necessity and appropriateness of detaining the suspects contrary to the principle of non-detention," which is a point of interest.

For the prosecution, which has been investigating for one year and seven months, it does not seem easy to secure decisive testimony or physical evidence through supplementary investigations that could overturn the warrant hearing results and reapply for the warrants against Vice Chairman Lee and others.

The Economic Crime Division of the Seoul Central District Prosecutors' Office (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 on charges of violating 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 BioLogics were carried out under the leadership of the group’s top executives.

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

Meanwhile, with the dismissal of the arrest warrants requested by the prosecution, the Prosecutorial Investigation Deliberation Committee (Investigation Deliberation Committee), which Samsung requested to assess the validity of the indictment, is expected to attract attention.

If the court had issued the arrest warrants for Vice Chairman Lee and others, the deliberation opinion of the Investigation Deliberation Committee on the validity of the indictment would have been virtually meaningless.

Even if the Investigation Deliberation Committee, composed of external experts, conveyed an opinion to the investigation team that "indictment is inappropriate," the prosecution would unlikely refrain from indicting suspects who are already detained.

The Seoul Central District Prosecutors' Office plans to hold a referral deliberation committee on the 11th to discuss the agenda of referring Vice Chairman Lee's case to the Investigation Deliberation Committee.

If the arrest warrants for Vice Chairman Lee had been issued, even if the referral deliberation committee resolved to refer the case for deliberation, it would have had little significance. However, given the current situation where the warrants were dismissed, the opinion of the Investigation Deliberation Committee on the indictment of this case has gained importance, increasing the likelihood that the referral deliberation committee will resolve to refer the case.

The referral deliberation committee, composed of 15 citizen prosecutors from the Seoul Central District Prosecutors' Office, reviews whether to refer the case to the Investigation Deliberation Committee based on written opinions submitted by the lead prosecutor and the suspects or other related parties.

If the referral deliberation committee, which is held privately, passes a resolution to refer the case to the Investigation Deliberation Committee with the majority of attending members' approval, it sends a request for convening the committee to the Prosecutor General.

Subsequently, the current affairs committee, composed of 15 members, deliberates on the matter with at least 10 members participating and prepares a deliberation opinion report on the results, which is sent to the lead prosecutor.

According to related guidelines, regarding the effect of the deliberation, "the lead prosecutor must respect the deliberation opinion of the current affairs committee," so while it is not binding, the investigation team inevitably faces pressure when making decisions that contradict the deliberation opinion of the Investigation Deliberation Committee.

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