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Vice Chairman Lee Jae-yong of Samsung Electronics is entering the courtroom to attend the warrant hearing held on June 8 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 allegations surrounding the merger between Samsung C&T and Cheil Industries, is expected to reach a conclusion early this week on whether to take legal action against Samsung Electronics Vice Chairman Lee Jae-yong and others, and to announce the final investigation results.

Inside and outside the prosecution, the prevailing view is that despite the Prosecution Investigation Deliberation Committee’s (hereafter, the Deliberation Committee) recommendation of ‘non-prosecution,’ the prosecution will indict Vice Chairman Lee and others. However, the possibility of selective prosecution, such as a ‘suspension of indictment’ for Vice Chairman Lee and related parties, cannot be ruled out.

According to the legal community on the 30th, with the personnel reshuffle on the 27th, Lee Bok-hyun, head of the Economic Crime Criminal Division who has been handling Samsung-related investigations, will move to the Daejeon District Prosecutors’ Office as head of the Criminal Division 3 on the 3rd of next month. Therefore, the dominant expectation is that the prosecution will either indict or dismiss charges against the related parties and close the case before then.

At the Deliberation Committee meeting held on June 27, an overwhelming majority of members voted for ‘non-prosecution’ regarding Vice Chairman Lee, former Samsung Future Strategy Office Strategy Team Leader Kim Jong-jung, and Samsung C&T as a corporation. In particular, the committee even recommended ‘suspension of investigation’ for Vice Chairman Lee.

However, despite 65 days passing since the Deliberation Committee’s recommendation for ‘suspension of investigation and non-prosecution,’ the prosecution has yet to announce the final investigation results.

Prosecution Continues Supplementary Investigation by Summoning External Experts... Opinions Divided Among Experts

In particular, the prosecution ignored the Deliberation Committee’s opinion to ‘stop the investigation of Vice Chairman Lee’ and summoned university professors specializing in commercial law and business administration to the prosecution to seek their opinions on allegations of accounting fraud at Samsung BioLogics, continuing supplementary investigations.

Regarding this, there have been conflicting analyses around the prosecution: some say the prosecution is gathering opposing expert opinions to supplement its logic on the premise of indictment, while others interpret it as a process to build justification for following the Deliberation Committee’s non-prosecution recommendation.

Some experts who were summoned and investigated by the prosecution voiced dissatisfaction with the prosecution’s investigation methods and attitude.

Professor A, who requested anonymity, recalled, “I thought I would just talk for about two hours and be done, but the investigation took much longer than expected, which was surprising. I thought it was just a place to share my views, but when I expressed opinions different from the prosecution’s stance that ‘accounting fraud is established,’ the prosecutor presented opposing views, leading to what could be called a debate or even an argument.”

Professor A added, “There are many cases like recent fund fraud incidents that caused huge damage to the public, so I don’t understand why the prosecution is so obsessed with this case. It is a vague matter with conflicting opinions even among accounting and legal experts, a case without a clear answer, so I don’t understand why they insist on punishing it by deciding on a certain answer.”

The prosecution has been investigating the 2015 merger between Samsung C&T and Cheil Industries and the subsequent accounting changes at Samsung BioLogics, a subsidiary of Cheil Industries, on suspicion that these were carried out to ensure Vice Chairman Lee’s stable succession of management rights. They suspect group-level organized illegal activities such as stock price manipulation and accounting fraud, and have been investigating violations of the Capital Markets Act (fraudulent transactions and market manipulation) and the External Audit Act.

However, whether Samsung BioLogics’ accounting treatment of the call option (the right to purchase shares at a predetermined price) held by U.S. joint venture Biogen on its subsidiary Samsung Bioepis as a liability after the 2015 merger was appropriate or problematic remains a matter of debate among accounting and legal experts.

Therefore, even without considering the Deliberation Committee’s recommendation, the legal community’s consensus is that the prosecution could either indict or dismiss charges against Vice Chairman Lee and others from the outset.

Previously, on June 9, when Judge Won Jeong-sook of the Seoul Central District Court, who handled the warrant hearing for Vice Chairman Lee and others, dismissed the prosecution’s request for an arrest warrant, she used the phrase “basic facts have been established” instead of the usual “criminal suspicion has been established.” She also stated, “It is appropriate to determine the responsibility and degree of the suspects through sufficient debate and trial process,” which can be interpreted as a lack of conviction regarding the establishment of the crime.

Possibility of Indictment Based on ‘Political Judgment’ Without ‘Legal Certainty’

Ultimately, the conclusion of this investigation is likely to be made based more on political considerations or the prosecution’s political judgment rather than legal certainty.

Having investigated for one year and nine months and even requested arrest warrants for key suspects, closing the case with a non-prosecution disposition would be tantamount to admitting that the investigation was ‘excessive,’ which would be a significant burden for the prosecution.

Therefore, unlike other cases, the prosecution is highly likely to choose to send the main suspects to trial, even at the risk of criticism for ignoring the Deliberation Committee’s recommendation and thereby undermining the purpose of the Deliberation Committee system it introduced for convenience in accepting or rejecting recommendations.

In particular, the Ministry of Justice’s recent personnel reshuffle, which established a Special Trial Team 2 at the Seoul Central District Prosecutors’ Office and appointed Kim Young-cheol, head of the Criminal Division 4 at Uijeongbu District Prosecutors’ Office who participated in the Samsung investigation, as team leader, is analyzed as a strategic move considering the upcoming trial of Vice Chairman Lee and others, lending weight to the possibility of indictment.

The conclusion of the investigation into Vice Chairman Lee and others may also affect the investigation into Prosecutor General Han Dong-hoon in the so-called ‘media collusion’ case, for which the Deliberation Committee recommended ‘suspension of investigation and non-prosecution.’

If the prosecution follows the Deliberation Committee’s recommendation and dismisses charges against Vice Chairman Lee, it would mean that in nine out of ten cases where the Deliberation Committee was convened, the prosecution has without exception followed its recommendations. This would make it difficult to ignore the committee’s opinion and indict Prosecutor General Han in the tenth and final case.

On the other hand, if the prosecution chooses to indict Vice Chairman Lee contrary to the Deliberation Committee’s recommendation, it would be the first case where the prosecution did not follow the committee’s opinion, potentially providing justification for the prosecution to continue investigating Prosecutor General Han and forcibly proceed with indictment.

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