All the legal problems of Samsung’s top management
Samsung Electronics Vice President Lee Jae-yong, heir to the South Korean tech empire, is under investigation on suspicion of manipulating share prices as part of a merger between two group companies in 2015
New grain with justice for the leader of Samsung. South Korean prosecutors on Tuesday indicted Lee Jae-yong, the de facto head of the Samsung group, on charges of accounting fraud and stock price manipulation related to a 2015 merger.
This is a new blow to the head of one of the most important companies in Asia. Lee Jae-yong's 2017 indictment of corruption led to the impeachment of former President Park Geun-hye.
Samsung is the largest technology group in South Korea, with a turnover that represents one fifth of the country's GDP.
According to the Financial Times, the latest escalation of the long legal saga involving Samsung has sparked concern among international investors.
Yet the shares of major Samsung companies remained broadly unchanged after the announcement. Samsung Electronics grew 0.4% and Samsung C&T grew 2.3%.
All the details.
NEW ACCUSATION FOR LEE
Samsung Electronics Vice President, Western name Jay Y. Lee, is under investigation on suspicion of manipulating share prices as part of the controversial merger of two subsidiaries Samsung C&T and Cheil Industries in 2015.
The Korean magistrates' investigation also covers 10 current and former executives. According to the indictment, Lee and the other managers on that occasion implemented "a systemic scheme to take control of the Samsung group at the lowest cost". Using the practice of unfair transactions, the prosecution said, unfolding "various unfair transactions".
EMBEDDED IN 2017
Jay Y. Lee, son of group president Lee Kun-hee, has been at the helm of Samsung since 2014 after his father suffered a heart attack.
In 2017, prosecutors indicted Lee for paying bribes to a close friend of then South Korean President Park Geun-hye in exchange for government support to secure leadership.
Lee was jailed for about a year, until his release in February 2018, for his role in the corruption scandal.
FALSE DISCLOSURE AND ACCOUNTING FRAUD
The new indictment is related and focuses on Lee and Samsung using illegal means to help him take control of the group his grandfather founded. The $ 8 billion merger between the two units of Samsung's C&T Corp and Cheil Industries in 2015 was seen as the key to increasing Lee's control over the group.
Prosecutors also said that Lee and other Samsung executives worked together to inflate the businesses of Samsung BioLogics Co Ltd to avoid criticism that the merger was agreed on terms favorable to shareholders of Cheil Industries, of which Lee was the largest shareholder. . Cheil was a major shareholder of BioLogics.
"We took into consideration the seriousness of the matter, which disturbed the order of the capital market," said Lee Bok-hyun, chief prosecutor at the Seoul Central District Prosecutor's Office.
THE DEFENSE OF LEE
Jay Y Lee's lawyers denied the allegations in a statement, calling the charge unfair, but said the defendants "will conscientiously participate" in a trial.
WHAT HAD AN INDEPENDENT JURY DECIDED IN JUNE
Lee will not be arrested as a Seoul court denied a request from prosecutors for an arrest warrant in June.
Prosecutors decided to indict Lee despite an independent civil committee's recommendation in June against such action. The jury's decision was not binding but reflected some public support for the country's largest company.
THE FEARS OF INVESTORS
As the Financial Times reports , recent allegations have brought Samsung's succession to leadership and opaque corporate governance back into the spotlight just as the group grapples with the economic fallout of the coronavirus pandemic.
“As a shareholder, we are concerned about lengthy legal disputes and uncertainties,” said Park Yoo-kyung, consultant to APG Asset Management, the Dutch pension fund, heard by the Ft.
Even an investment manager at a US hedge fund warned that the latest legal woes could distract Mr. Lee from focusing on Samsung's growth opportunities. "While day-to-day operations will not be affected, rising legal woes could slow Samsung's decision-making process on major issues like major acquisitions," he told the Ft .
NO LONGER THE FIRST SMARTPHONE MANUFACTURER IN THE WORLD
It should not be forgotten that Samsung also lost the scepter of world leader in smartphone sales this summer. In the second quarter of 2020, Huawei overtook the South Korean manufacturer, according to the estimate of Canalys, an analysis company specializing in the technology sector. In spite of the long campaign of US pressure against Huawei, the Shenzhen tlc group has delivered 55.8 million devices, compared to 53.7 million units of Samsung.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/tutte-le-grane-legali-dei-vertici-di-samsung/ on Tue, 01 Sep 2020 13:10:05 +0000.