Prosecutors in a Dilemma Over Lee Jae-yong and Samsung: What Is the Next Move?

[Image source=Yonhap News]

[Asia Economy Reporter Choi Seok-jin] The prosecution, which has been investigating allegations such as market manipulation and false disclosure during the merger process between Samsung C&T Corporation and Cheil Industries, has found itself in a difficult situation.

On the 26th, the Prosecution Investigation Deliberation Committee (Investigation Deliberation Committee) special committee, convened at the request of Samsung Electronics Vice Chairman Lee Jae-yong (52), former Samsung Future Strategy Office Strategy Team Leader Kim Jong-joong (64), and Samsung C&T Corporation, issued opinions of ‘non-prosecution’ for these three individuals and ‘suspension of investigation’ for Vice Chairman Lee.

Notably, out of the 14 committee members attending the special committee, 13 participated in the vote excluding the acting chairman, and it was reported that 10 of them gave the ‘non-prosecution opinion.’

Previously, the prosecution had even requested arrest warrants for Vice Chairman Lee, former Future Strategy Office Chief Choi Ji-sung (69), and former Team Leader Kim on charges including unfair trading and market manipulation under the Capital Markets Act, and violations of the External Audit Act for Stock Companies, making this outcome difficult for the prosecution to accept.

Internally, the prosecution had already decided on the handling of Vice Chairman Lee and others, but the sudden request by Samsung to convene the Investigation Deliberation Committee seems to have completely blindsided them.

Immediately after the decision of the Investigation Deliberation Committee was made public, the Seoul Central District Prosecutors’ Office stated, “The prosecution will review the final disposition by synthesizing the investigation results so far and the opinions of the Prosecution Investigation Deliberation Committee.” This leaves room for the prosecution to choose a different course from the committee’s opinion.

Looking ahead, it is possible to predict roughly three options the prosecution might choose.

◆ ‘Ignoring the committee’s opinion’ and proceeding with non-custodial indictment = First, the prosecution might ignore the committee’s opinion and complete the ongoing investigation, then proceed with non-custodial indictments against Vice Chairman Lee, former Chief Choi, former Team Leader Kim, and Samsung C&T Corporation.

This is arguably the most likely outcome. Although there were reportedly differences of opinion between Lee Sung-yoon, head of the Seoul Central District Prosecutors’ Office, other senior officials, and the frontline investigation team during the process of requesting arrest warrants for Vice Chairman Lee and others, the fact that Prosecutor Lee approved the arrest warrant request in line with Prosecutor General Yoon’s wishes suggests that internally, the indictment of Vice Chairman Lee and others was already a foregone conclusion.

Especially since the committee’s opinion is not legally binding but merely advisory, there is no legal obstacle for the prosecution to indict Vice Chairman Lee and others.

Unlike the professional investigation advisory group, the Investigation Deliberation Committee is composed of non-legal experts, and there is a skeptical view about whether it is appropriate to overturn the results of a 19-month investigation based on the votes of 13 members participating in the vote that day.

However, since the Investigation Deliberation Committee system was introduced by the prosecution itself as part of its internal reform measures to “secure objectivity and fairness in investigation procedures by hearing opinions from external experts,” and considering the fairness issue given that the prosecution respected the committee’s opinions in eight previous cases, the prosecution faces a burden.

Even if the prosecution continues the investigation on the premise of indictment, Samsung has gained the advantage that the investigation team would find it difficult to consider reapplying for arrest warrants. Throughout the potentially years-long trial process following the prosecution, the labels of “excessive indictment” and “prosecution ignoring external opinions” will likely accompany the case, which could work in Samsung’s favor during the trial.

◆ ‘Respecting the committee’s opinion’ and suspending investigation with non-prosecution = The next possible choice for the prosecution is to respect the committee’s opinion, suspend the investigation of Vice Chairman Lee and others, and issue a non-prosecution disposition.

In this case, the prosecution would receive positive evaluations for not ignoring but respecting the opinions of external experts, and the business community would likely appreciate the reduction of ‘owner risk’ burdens on companies during difficult economic times caused by investigations and trials.

However, there is much skepticism about whether the prosecution, after conducting a rigorous investigation for over a year, would admit that the investigation was excessive and effectively ‘deny itself.’

Moreover, with Justice Minister Choo Mi-ae repeatedly criticizing Prosecutor General Yoon Seok-youl, and Prosecutor Han Dong-hoon, who has worked closely with Yoon since the Park Young-soo special prosecutor team investigating Samsung’s merger and succession suspicions, being demoted and under inspection, it seems difficult for the prosecution to admit that this investigation was also excessive.

◆ Non-prosecution of Vice Chairman Lee, indictment of Choi Ji-sung and Kim Jong-joong = Lastly, the prosecution might choose to not prosecute Vice Chairman Lee but proceed with non-custodial indictments against former Chief Choi and former Team Leader Kim.

This decision would consider the controversy over whether Vice Chairman Lee was aware of the illegal acts during the merger process between Samsung C&T and Cheil Industries, and the committee’s opinion to suspend the investigation on Vice Chairman Lee.

Since former Chief Choi and others strongly deny reporting to Vice Chairman Lee, and there is a possibility of acquittal for Vice Chairman Lee in court, this compromise option would respect the committee’s opinion while preserving the prosecution’s dignity by indicting former Chief Choi and Kim, for whom sufficient evidence and testimony have been secured.

However, since this reverses the prosecution’s previous investigation results that Vice Chairman Lee was aware of and led the series of events, it is less likely to be adopted compared to the other two options.

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