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Samsung heir questioned over fraud accusations

Reuters
Samsung Group heir Jay Y. Lee was questioned yesterday by prosecutors about a controversial 2015 merger and alleged accounting fraud.
Reuters

Samsung Group heir Jay Y. Lee was questioned yesterday by prosecutors about a controversial 2015 merger and alleged accounting fraud that they said may have helped him advance his succession-planning agenda at the country’s top conglomerate.

The questioning brings fresh legal trouble for Lee who is already facing trial over a charge of bribery to win support to succeed ailing group patriarch Lee Kun-hee, and which involved former South Korean President Park Geun-hye.

Prosecutors have been investigating suspected accounting fraud at drug company Samsung Biologics after the Korean financial watchdog said the firm’s value had been inflated by 4.5 trillion won (US$3.64 billion) in 2015. It has alleged that Biologics violated accounting rules to help improve the value of its major owner, Cheil Industries, which counted Lee as its top shareholder, Yonhap News Agency, which first reported Lee’s questioning, said.

Cheil, Samsung Group’s fashion and theme-park operator, merged with de facto group holding company Samsung C&T in a 2015 transaction that enabled Lee to become the top shareholder of Samsung C&T.

The deal was criticized by US hedge fund Elliott Management and other investors for favouring family members at the expense of minority shareholders.

The prosecutors’ office confirmed Lee was summoned for questioning.

“We today summoned a relevant person with regard to Samsung Group’s illegal merger and accounting fraud case,” said an official at the Seoul Central District Prosecutors’ office.

A spokesman at Samsung Electronics, the conglomerate’s biggest company where Lee is vice chairman, declined to comment.

Lee, 51, served a one-year detention over the bribery case until it was suspended in 2018.

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