Samsung Chairman Lee Kun-Hee Summoned By India’s Top Court To Face Criminal Charges Over Non-Payment Of $1.4M In Dues Owed To Indian Company By UAE Subsidiary

The Supreme Court of India, the country’s highest court, ordered Lee Kun-Hee, the chairman of Samsung Electronics Co. Ltd. (KRX:005935), to appear before a court in the city of Ghaziabad in the northern state of Uttar Pradesh, to face criminal charges over non-payment of $1.4 million owed by the Korean company's subsidiary to an Indian vendor.

Charging Lee of cheating, fraud and criminal conspiracy, the court said that the executive needs to appear before the lower court within the next six weeks, and if he fails to do so, Indian police will have orders to arrest him the next time he enters the country. The case was filed by JCE Consultancy, a New-Delhi-based maker of coke calcination packages, used in the aluminum industry.

According to JCE, the company sold goods worth $1.37 million in November 2001 to Sky Impex Ltd., a Dubai-based firm, which purchased the products on behalf of Samsung Gulf Electronics, a subsidiary in Dubai.

While Samsung claimed it had executed a bill of exchange to Sky Impex for purchase of the products, JCE said the South Korean company did not honor its commitment, Mint, a local business news publication, reported. However, Samsung said that Lee had no connection to the case as he was not involved in the daily operations of the company's many overseas subsidiaries.

“There are no grounds, let alone evidence, to support the accusation against Chairman Lee,” MarketWatch quoted a Samsung spokesperson as saying. “We are confident that the Indian Courts will recognize the innocence of Chairman Lee and deliver justice.”

Meanwhile, Mandeep Vinayak, a lawyer for JCE, said that Samsung had refused to pay the money it owed his client, which forced JCE to register a case against the Korean electronics giant. Samsung, on the other hand, said that it was a victim of a “fraud.”

“The perpetrators of the fraud were convicted years ago in Dubai to two years in prison, but having illegally fled justice, are now wanted by the government of the UAE (United Arab Emirates). Samsung Gulf Electronics is a victim of this fraud scheme,” the spokesperson told MarketWatch.

Samsung operates a thriving electronics business in India, selling products ranging from flat-screen televisions to refrigerators to smartphones. Last fiscal year, the company surpassed Nokia to become the leader with a 31.5 percent share of the country's nearly $6 billion mobile-phone market.