Arrest sought for Samsung chief for fraud and stock manipulation

SEOUL — South Korean prosecutors on Friday sought a five-year prison sentence for Samsung Electronics chief Jay Y. Lee on charges of accounting fraud and stock price manipulation involving an $8 billion merger from Samsung affiliates in 2015.

Lee denied any wrongdoing. The hearing is the last session of the court of first instance before a decision, which is expected within months, ending a trial that has already lasted three years.

The case is the latest against Lee, who was pardoned for a previous, separate conviction and last year cemented his leadership position at Samsung as executive chairman.

During Friday’s hearing, prosecutors told the Seoul Central District Court that Lee, 55, and other former executives violated the Capital Markets Law to make possible the 2015 merger that helped Lee take greater control of Samsung. Electronics, the group’s flagship product.

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Prosecutors alleged that the executives’ involvement in the merger of group affiliates Samsung C&T and Cheil Industries included stock price manipulation and other irregularities that helped them gain at the expense of minority investors.

“The defendants undermined the foundations of the capital market to facilitate the leader’s succession,” said the prosecutor’s office.

“They abused the authority granted by the company and shareholders for the private interests of the group leader and abused the extreme imbalance of information.”

Lee and the executives have denied any wrongdoing, saying the merger and accounting processes that prosecutors questioned were part of normal management activities. The defendants’ final arguments will be heard on Friday, November 17th.

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Lee attended the hearing on Friday. A small group of supporters chanted his name outside the courtroom during the recess, while detractors shouted anger at him.

Analysts said that depending on the verdict, Lee will find it easier or harder to shape the future of Samsung Electronics and its affiliates. An acquittal would give him more room to make important strategic decisions, especially in mergers and acquisitions.

Lee was previously convicted of bribing former South Korean President Park Geun-hye and was imprisoned for a total of 18 months from 2017 to 2021. He was later released on parole 2021 and pardoned in 2022.