'Unfair Merger and Accounting Fraud' Lee Jae-yong Trial on the 20th... Defense Cross-Examination

[Asia Economy Reporter Seongpil Cho] The second witness examination for Vice Chairman Lee Jae-yong, who has been indicted for ordering and approving the unfair merger of Samsung C&T and Cheil Industries to secure Samsung Group's management succession, will be held on the 20th.

The Criminal Division 25-2 of the Seoul Central District Court (Presiding Judge Park Jeong-je) will hold the third trial session for Lee and others, who have been charged with unfair trading practices and market manipulation under the Capital Markets Act, as well as breach of fiduciary duty. Han, a former Samsung Securities corporate finance employee who appeared as a witness in a previous trial session, will once again take the witness stand. In the previous session, only the prosecution's direct examination was conducted. On this day, the defense's cross-examination is scheduled to proceed.

During the prosecution's direct examination, Han testified, "I participated in the preparation of the 'Project G' report, which was known as Vice Chairman Lee's succession plan," adding, "The reason the report specified the need to improve the group's governance structure at that time was to prepare for the possibility that the overall group shareholding ratio might weaken from a tax perspective when external events such as succession occurred." Han further explained, "It was not intended to increase the major shareholder's shareholding ratio but to prepare for the company's development by improving the overall governance structure."

Project G is a document established around December 2012. The prosecution believes that from 2013, Samsung proceeded with the succession work according to the plan in this report, but when the situation rapidly changed due to Chairman Lee Kun-hee's illness, the plan was revised to promote the listing of Cheil Industries (formerly Everland), among other things. On the other hand, Vice Chairman Lee's side maintains that the listing of Cheil Industries and the merger of Cheil Industries and Samsung C&T were decisions based on business judgment and are legally unproblematic. It is expected that during the defense's cross-examination on this day, questioning will be conducted to elicit answers supporting the claim that the merger was legally carried out due to business necessity.

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