‘Prosecution or Non-Prosecution of Vice Chairman Lee Jae-yong’... A Month-Long Dilemma for the Prosecution

Reluctant to drop charges for appearances, yet lacking confidence to prove allegations
Tomorrow's 'Prosecutor-Media Collusion' Investigation Review Committee outcome likely a variable
Previous financial authorities and courts' "No merger issues" rulings also add pressure

Vice Chairman Lee Jae-yong of Samsung Electronics is entering the courtroom to attend the warrant hearing held on the 8th of last month at the Seoul Central District Court in Seocho-gu, Seoul.
Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Choi Seok-jin] The prosecution, which has been investigating illegal allegations surrounding the merger between Samsung C&T and Cheil Industries, appears to be stalling without making a decision to indict Samsung Electronics Vice Chairman Lee Jae-yong and others.

This can also be interpreted as evidence that the prosecution lacks confidence in proving the charges enough to ignore the prosecution review committee's recommendation not to indict and proceed with prosecution.

However, since the prosecution had previously requested arrest warrants on the premise of indicting Vice Chairman Lee and others, it seems to be caught in a 'dilemma' where it is awkward to simply accept the non-prosecution recommendation as is.

Another variable is the decision of another prosecution review committee scheduled for the 24th.

◆The Central District Prosecutors' Office Unable to Make a Decision= At the prosecution review committee meeting held on the 26th of last month, the majority of the committee members reached a consensus on 'suspending the investigation' and 'non-prosecution.'

Legal circles analyzed this by saying, "The committee members found it difficult to be convinced of guilt based solely on the evidence presented by the prosecution."

In particular, it is known that the prosecution failed to present decisive evidence proving that Vice Chairman Lee was informed of or tacitly approved the series of merger decision processes in advance.

At that time, former Seoul Bar Association President Kim Han-kyu said, "If even the committee members, who are ordinary citizens, were not convinced by the charges, it is questionable how the court will be persuaded," adding, "Given the current situation, it seems advisable to accept the prosecution review committee's recommendation."

Looking at the reasons the court gave for dismissing the arrest warrants requested by the prosecution for Vice Chairman Lee and others, it is possible to interpret that the court also held a skeptical view of the alleged crimes in the warrant.

The fact that the judge in charge of warrants used the phrase "basic facts have been established" instead of the usual expression "the criminal facts (charges) have been proven" is widely interpreted in legal circles as implying "insufficient evidence of charges by the prosecution."

◆Tomorrow's Prosecution Review Committee Result on the 'Media Collusion' Case Also a Variable= The prosecution review committee meeting on the 24th regarding the 'media collusion' case also appears to be one of the factors making the prosecution hesitate about the judicial treatment of Vice Chairman Lee and others.

In the case of former Channel A reporter Lee Dong-jae, for whom an arrest warrant has already been issued, the prosecution review committee is likely to recommend 'indictment.' Accordingly, the prosecution is expected to accept the committee's recommendation and immediately indict the former reporter Lee.

In other words, if the prosecution indicts Vice Chairman Lee, it could lead to criticism that the prosecution selectively accepts or rejects the prosecution review committee's recommendations to suit its preferences.

If such a situation occurs, it would result in Vice Chairman Lee being the only case among the total of 10 prosecution review committees where the decision differs from the recommendation.

A senior prosecutor-turned-lawyer, Attorney A, diagnosed the prosecution's current stance, saying, "If they accept the prosecution review committee's recommendation and decide not to prosecute, it would be a loss of face, but if they forcibly indict, it would be burdensome to secure a guilty verdict in future trials. It is a classic dilemma."

◆Financial Authorities and Court Judgments Also a Burden= Unlike the prosecution's investigation based on the premise that the Samsung C&T-Cheil Industries merger was pursued illegally to secure Vice Chairman Lee's management succession rights, the financial authorities and courts had previously ruled that there was no legal problem with the merger.

In 2015, when suspicions about the merger of the two companies were raised, the Financial Services Commission and the Financial Supervisory Service reported to the 19th National Assembly through simulation work calculating the merger ratio that "there was no problem in the merger process."

In the same year, in the injunction cases filed by the U.S.-based hedge fund Elliott Management against Samsung C&T to prohibit shareholder meeting resolutions and disposal of treasury stocks, the court dismissed both cases, stating, "Even if the purpose of the merger included succession, it is not illegal."

Also, in 2017, the court ruled in a merger invalidation lawsuit filed by Il Sung Pharmaceutical and others against Samsung C&T that "the merger ratio was calculated according to the Capital Market Act, and there are no special circumstances indicating fraudulent trading," and thus the merger could not be considered invalid.

At that time, the court stated, "Even if it was part of Vice Chairman Lee's comprehensive management succession plan, there was managerial rationality, and management succession was not the sole purpose of the merger."

Some in the legal community predict that, similar to the Everland case where the prosecution indicted the working-level staff before Chairman Lee Kun-hee to get the court's judgment first, the prosecution might try to overcome the current situation by postponing the final decision on Vice Chairman Lee, for whom the prosecution review committee recommended 'suspending the investigation,' and instead indict the working-level staff first.

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