Lee Jae-yong admitted in 2016 to have received reports of unfair merger between Samsung C&T and Cheil

Samsung Electronics Vice Chairman Lee Jae-yong, who has denied receiving reports in connection with an unfair merger between Samsung C&T and Cheil Industries

Lee Jae-yong admitted in 2016 to have received reports of unfair merger between Samsung C&T and Cheil

Lee Jae yong, Amid an investigation into illegal practices connected with his management succession within the Samsung Group, answered during questioning in connection with a previous influence-peddling scandal that he had “received reports stage by stage,” it emerged on July 2.

According to an investigation by the Hankyoreh, Lee was questioned as a witness on Nov. 13, 2016, by the Seoul Central District Prosecutors’ Office regarding government influence peddling by former President Park Geun-hye and Choi Seo-won (previously known as Choi Sun-sil). At the time, prosecutors were investigating allegations that Samsung had bribed Choi’s family to receive help with Lee’s succession of management authority of Samsung Group ahead of the launch of a special prosecutor’s team under Park Young-soo. In particular, investigators were looking into the extent of Lee’s involvement in the merger process between Samsung C&T and Cheil Industries. When asked whether developments in the merger process were reported to Lee and received his approval on an ongoing basis, Lee reportedly replied that he had “received reports stage by stage,” during which time he “asked questions and held discussions.”

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Lee denied ever having received reports in 2020

But when he appeared before prosecutors on the two days of May 27 and 29 this year, Lee claimed that the Samsung C&T/Cheil Industries merger was “something the former Samsung Future Strategy Office (FSO) had done on its own initiative” and that he had “never received any reports or issued instructions.” In a telephone interview with the Hankyoreh, an attorney representing Lee even said that Lee’s claim not to have received any reports on the merger was “not a position, but a fact.” It represented a 180-degree turnaround in Lee’s attitude on the merger within the last four years.

It also emerged that during the investigation in 2016, Lee acknowledged “some persuasion efforts” in connection with allegations of lobbying of the National Pension Service (NPS), which played a pivotal role in the merger going ahead due to its 11.12% stake in Samsung C&T. On the question of what activity the group had engaged in to encourage NPS to grant its approval, Lee reportedly said it was “true that there was an effort to persuade shareholders across the country” in “different walks of life, including the NPS.” At the same time, he was also quoted as saying he was “not aware of the specifics of how it proceeded because they were not reported to me.”

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Evidence of Samsung constantly changing its story

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Evidence of Samsung changing its story has emerged several times in the course of the prosecutors’ investigation. During a 2018 investigation of Samsung BioLogics by financial authorities, it claimed in connection with call option liabilities possessed by affiliate Samsung Bioepis’ US joint venture Biogen that it had “changed our accounting practices on the advice of an accounting firm.” But internal documents revealed that Samjong, the accounting firm in question, was completely unaware of the call option terms due to concealment on the part of Samsung BioLoGics.

Samsung also claimed that Bioepis’ accounting practices in 2015 were in response to the BioLogics’ generic drug development activities. But under questioning by prosecutors, BioLogics Chief Financial Officer Kim Dong-joong claimed that the generic development was a “hastily contrived event,” and that “Bioepis’ listing on NASDAQ was regarded as a major event at the time.”

This news was originally published at english.hani.co.kr

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