Samsung Chief To Be Arrested Over Market Manipulation, Fraud Charges

Samsung's de facto head Lee Jae-yong is set to face another round of legal issues after prosecutors filed for a warrant of arrest over charges of market manipulation and fraud.

The Seoul Central District Prosecutors' Office filed for an arrest warrant against Samsung heir Lee, also known as Jay Y. Lee in English-speaking countries, as well as two former Samsung execs, Business Korea reported.

The other two are Choi Ji-sung, former head of Samsung's Future Strategy Office, and Kim Jong-joong, former head of Samsung's U.S. strategy team. All three have been charged with committing illegal transactions and market manipulation in violation of the Capital Markets Act, and accounting fraud in violation of the Act of External Audit of Stock Companies.

The prosecutors said they are looking to arrest the Samsung chief based on suspicions regarding the merger between Samsung C&T and Cheil Industries, a chemical and textiles company, in 2015, Reuters reported. Prosecutors believe that Samsung overinflated the value of Samsung BioLogics so that Lee will be able to take control of the merger.

Not a knee-jerk reaction

The prosecutors's move to file for an arrest warrant comes two days after Lee, who is Samsung Electronics' vice chairman, had asked the Seoul Central District Prosecutors' Office to convene a prosecutorial investigation review board composed of external experts. If granted, Lee's request, made on Monday (June 1), will mean prosecutors won't be the ones determining the validity of his indictment.

The timing of the prosecutors' office's request for an arrest warrant had been considered by critics as a “sudden reaction” to Lee's request. The prosecutors, however, dismiss these claims as “utterly untrue,” The Hankyoreh reported.

Per the prosecutors' office, the prosecutor had already determined by June 1 that it will file for an arrest warrant based on the evidence it had acquired against Lee.

“The Seoul Central District Prosecutors’ Office had already made the determination to request an arrest warrant and discussed its approval with the Public Prosecutor General prior to the suspects’ investigation review board request based on factors including the scale of fraud, the severity of the charges, and the resulting economic gains,” the prosecutors explained.

Based on this, the prosecutors would have requested for an arrest warrant whether or not Lee made his request. The Seoul Central District Court said in a statement that it will review the prosecution’s request on June 8.