SEOUL (Reuters) – Samsung Group leader Jay Y. Lee appeared before a South Korean court on Monday, awaiting a ruling on whether new allegations, including accounting fraud and stock manipulation, will send him back to jail after more than two years in custody.
Samsung Group heir Jay Y. Lee arrives at a hearing to review a custody request against him at Seoul Central District Court in Seoul, South Korea, June 8, 2020. REUTERS / Kim Hong-Ji
Prosecutors last week asked the court to issue an arrest warrant against Lee, culminating in a probe into a controversial 201
The risk of more jail time for Lee, who has led the group since his father’s heart attack in 2014, has thrown a pal on the conglomerate and its crown jewel, Samsung Electronics Co, whose annual revenue alone accounts for 12% of South Korea’s gross domestic product.
Lee, 51, wearing a face mask and a dark suit, appeared at Seoul court for a hearing beginning at 1 p.m. 10:30 am (0230 GMT). The Vice President of Samsung Electronics did not answer questions from reporters.
After the hearing, he is expected to go to a detention center to await the decision on whether he will be arrested, expected Monday or early Tuesday.
The court can then order Lee detained for 20 days while prosecutors continue with investigations. Thereafter, the charges must be filed and put on trial. During a trial, Lee can then be detained for up to six months.
However, investors do not expect disruptions in the day-to-day operations of Samsung, which has a deep backbench of professional executives, noting that the group has managed without him before.
Lee was jailed for approx. a year until February 2018 for his role in bribery scandals, accused of giving horses to the daughter of a confidant of former President Park Geun-hye to win government support for the merger of the two affiliates.
“Samsung is unlikely to have problems, even with Lee’s absence. But the case resumes the concerns of governance by South Korean conglomerates, “said Park Jung-hoon, fund manager at HDC Asset Management.
“Investors are tired of these controversies.”
Samsung Electronics’ stock has moved a bit since the arrest warrant request on Thursday.
The new allegations allege Lee was involved in illegal transactions and stock manipulation, which promoted the 2015 merger of subsidiaries, Samsung C&T and Cheil Industries. Prosecutors also claim he had a role in pumping the value of Samsung Biologics Co Ltd, which considered Cheil Industries a major shareholder.
The merger was seen as the key to Lee increasing control of the dispersed group, but critics say it ran hard over the interests of minority investors.
Samsung on Friday denied the allegation of stock manipulation against Lee, saying it was “beyond common sense” to claim Lee was involved in the decision-making process.
In a further statement over the weekend, the group said the long probe weighs on the administration, which is in “crisis” at a time when the coronavirus pandemic and US-China trade disputes are increasing uncertainty.
The company declined to make Lee available for comment.
In South Korea, economic power is heavily concentrated in several chaebol or conglomerates, many of which have become controversies over heritage issues.
Prior to his father’s heart attack and subsequent hospitalization, Jay Y. Lee and his sisters contained little of Samsung Electronics, and they have since sought to assert more control over the group through the two affiliates.
While Lee has served time for the bribery scandal, the Supreme Court of South Korea has since overturned a sentencing decision to postpone its verdict. It is unclear when a new court decision will be made on whether he will have to set aside additional jail time for this sentence.
Reporting by Hyunjoo Jin and Heekyong Yang; Additional reporting by Joyce Lee; Editing by Edwina Gibbs