檢, Lee Jae-yong chairman to be jailed for 5 years and fined 5 billion won (total).
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[iNews24 Reporter Min Hye-jeong] Prosecutors have sentenced Lee Jae-yong, the chairman of Samsung Electronics, to five years in prison on charges of improper merger and accounting fraud at Samsung C&T.
During the first trial of the capital market law violation case against Chairman Lee and others at the Seoul Central District Court on the 17th, the prosecution announced, “We sentence Chairman Lee to five years in prison and a fine of 500 million won. We took into consideration the fact that Chairman Lee denies the charges and his position as the decision-maker, as well as the fact that he benefited from the crime.”
Former Samsung Future Strategy Office Director Choi Ji-sung, who oversaw the merger, was sentenced to four years and six months in prison and a fine of 500 million won, while former Strategy Team Leader Kim Jong-joong was sentenced to three years in prison and a fine of 100 million won. Former Vice Chairman Jang Choong-ki was also sentenced to three years in prison and a fine of 100 million won.
The prosecution argued, “Our society has already witnessed Samsung’s tax-free transfer of management rights through cases such as the Everland convertible bond incident. Samsung attempted and succeeded in another free transfer of management rights in this case.” Following the prosecution’s sentencing, the defense lawyers’ final arguments and the final statements of the defendants, including Chairman Lee, will take place in the afternoon.
The trial of Chairman Lee, which began with his indictment, concludes after approximately 3 years and 2 months. Chairman Lee, who has denied the charges, is expected to plead not guilty in his own statement. With conflicting claims from both Samsung and the prosecution, and an extensive investigation record of over 190,000 pages, the verdict of the first trial is expected to be appealed.
Previously, Samsung C&T and Cheil Industries resolved to merge in May 2015 through a board of directors meeting, exchanging one share of Cheil Industries for approximately three shares of Samsung C&T. Regarding the merger between Samsung C&T and Cheil Industries, the usual merger ratio between listed companies is determined based on the average stock price over a certain period of time, so Samsung claims there were no issues with the ratio calculation. On the other hand, the prosecution suspects that Chairman Lee manipulated the merger ratio to secure stable ownership of Samsung C&T.
The prosecution also reports that in order to achieve a favorable merger ratio, Samsung BioLogics, a subsidiary of Cheil Industries, engaged in fraudulent accounting of assets worth more than 4 trillion won. However, Samsung argues that the transactions were carried out legally and out of business necessity, and that both companies did not suffer any losses.
