Samsung's 'Lost Decade' in Numbers... Inevitable Controversy Over Prosecutors' Excessive Investigation

[Asia Economy Reporter Kim Hyewon] On the 1st, as the prosecution pushed forward with the indictment of Lee Jae-yong, Vice Chairman of Samsung Electronics, the judicial risks facing the Samsung family and the entire group have entered a long-term battle that could last up to 10 years. Samsung’s timeline has effectively returned to the starting point about five years ago when the prosecution began its investigation.

Samsung's 'Lost Decade' in Numbers

The Economic Crime Division of the Seoul Central District Prosecutors’ Office (Chief Prosecutor Lee Bok-hyun) indicted Vice Chairman Lee without detention on charges including unfair trading and market manipulation under the Capital Markets Act, as well as breach of trust in the course of business.

Ten Samsung affiliates, including Choi Ji-sung (69), former head of Samsung’s Future Strategy Office (Vice Chairman), and Kim Jong-jung (64), former head of the Future Strategy Office’s Strategy Team (President), were also brought to trial.

This came one year and nine months after the Securities and Futures Commission filed a complaint with the prosecution on November 20, 2018, accusing Samsung Biologics of accounting fraud.

With the prosecution’s non-detention indictment of Lee and other current and former Samsung executives, the investigation into Samsung Biologics’ accounting fraud and Samsung’s merger and succession allegations has, for now, come to a close.

However, within and outside the legal community and Samsung, there is a view that this conclusion should be seen as coming four years and nine months after Lee was questioned as a witness by the special prosecutor in November 2016.

This is because the prosecution’s investigation, which began with the Samsung Biologics accounting issue, was conducted on essentially the same track as the special prosecutor’s investigation into the Samsung C&T-Cheil Industries merger. In fact, the prosecution viewed the entire process from the 2015 merger of Samsung C&T and Cheil Industries to the accounting changes at Samsung Biologics as part of Lee’s efforts to secure management succession.

It took nearly five years to examine the charges of a single case. This prolonged investigation fueled ongoing controversy over whether the prosecution had predetermined the outcome and then sought evidence to support it.

Ultimately, with the prosecution’s insistence on indictment, Samsung now faces its lost decade. Although the rejection of the arrest warrant for Vice Chairman Lee avoided the worst-case scenario of a leadership vacuum, he must face a new trial from the first instance due to additional charges related to the Samsung Biologics case.

Considering the ongoing bribery trial related to the Park Geun-hye and Choi Soon-sil political scandal, it is an unprecedented situation where normal management activities have been difficult for nearly 10 years since the first special prosecutor investigation.

Prosecution’s Over-investigation Controversy Inevitable

Throughout this process, the prosecution has not been free from controversy over excessive investigation. Objective figures attest to this.

Over the past four years and nine months, Vice Chairman Lee has set remarkable records, including being summoned by the prosecution 10 times and undergoing three detention warrant hearings. The trial following the special prosecutor’s indictment alone lasted 80 sessions. Of these, Lee personally attended about 70 sessions, including 53 in the first trial. The total trial time in the first instance alone reached 477 hours and 50 minutes. During the nearly two-year prosecution investigation related to the Samsung Biologics accounting fraud allegations, there were over 50 search and seizure operations and more than 430 summonses of executives and employees.

Professor Hong Ki-yong of Incheon National University’s Department of Business Administration said, “Since the case will inevitably go to the Supreme Court, Lee’s trial will take several years. Business is based on trust with trading partners, but uncertainty about Samsung’s future has arisen, which could affect capital procurement and increase distrust toward Samsung as a global company, ultimately having a negative impact on the overall investment environment in South Korea.”

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