Owner Risk Rising at Samsung

Samsung Electronics vice chairman Lee Jae-yong (second from left) visits the company’s semiconductor manufacturing plant located in Shanxi, China on May 18.

The prosecution is likely to determine soon whether to indict Samsung Electronics vice chairman Lee Jae-yong. Samsung Group’s concerns are mounting as the indictment will hinder its new business creation and investment in the semiconductor industry.

The group has undergone a number of investigations and trials since late 2016. In 2017, when the vice chairman was in prison, its investment and global M&A activities were almost stopped, not to mention a change in personnel.

The vice chairman was imprisoned on a charge of bribery in February 2017 and released on probation in February 2018. A retrial is currently underway, and he must reappear in court if the prosecution indicts him with regard to suspicions surrounding the merger between Samsung C&T and Cheil Industries.

According to the prosecution, Samsung Group conducted fraudulent accounting and the merger in an organized way so that the vice chairman can inherit the group and have more control. On the other hand, Samsung Group is claiming that Samsung Biologics’ change in accounting reflected the growth potential of the biotech sector and the merger has nothing to do with corporate succession.