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Samsung Heir Jay Y. Lee Once Again Back in Court Over Fraud Allegations, Faces Jail Time

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Samsung Group heir Jay Y. Lee on Monday arrived at a South Korean court which will rule whether he will be sent back to jail after more than two years of freedom, as new allegations dog the executive and cast a pall over the country’s top conglomerate, explains a new Reuters report.

Prosecutors on Thursday asked the court to issue an arrest warrant against Lee, bringing to a climax an investigation into a controversial 2015 merger of two Samsung affiliates that they said helped facilitate Lee’s plan to assume greater control of the group.

The controversial merger of the two Samsung affiliates — Cheil Industries and Samsung C&T — is said to have been a key step to Lee’s succession, helping facilitate his plan to assume greater control of Samsung, one of the largest family-controlled conglomerates in the country.

Lee was the largest shareholder in Cheil Industries, and critics say Samsung sought to artificially lower the price of C&T to give him a bigger stake in the merged entity — a key part of the Samsung structure — consolidating his grip on the conglomerate.

This won’t be an unfamiliar process for Lee, nor will it be the end of his legal troubles if the prosecutors’ request is denied. The Samsung scion spent almost a year in jail after being arrested in February 2017 and ultimately found guilty for his role in the massive corruption scandal that took down South Korea’s former president Park Geun-hye. Lee was released on appeal, although the Supreme Court later ordered a retrial that is yet to take place.

The potential jailing of Lee is a greater concern for Samsung because his absence would render it more difficult to make major decisions, such as mergers and acquisitions or extraordinary investments. A request from Lee’s lawyers for a public assessment of the validity of his indictment could delay the resolution: If the panel is formed, it will make an assessment and give recommendations to prosecutors in coming months.

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