Prudent conclusion

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Prudent conclusion

A panel of civilian experts advised the prosecution to drop its criminal investigation and charges against Samsung Electronics Vice Chairman Lee Jae-yong for violating the capital trade act in a corporate merger vital to his hereditary succession to the country’s most valuable company. The criminal investigation has been focused on illegitimacy in the merger of Samsung C&T and Cheil Industries in 2015 and Lee’s role.

The prosecution argues the reorganization scheme and irregularities during the process had been designed to help Lee’s smooth succession to the country’s top conglomerate after his father and chairman was hospitalized from a heart attack in 2014. It claims the accounting fraud and other illegalities were committed to draw the merger ratio favorably for Lee who had been informed of the entire proceeding. The prosecution has interviewed 110 employees of Samsung 430 times over the last 19 months and raided work sites more than 50 times. Still, an arrest warrant was denied by the court.

Samsung’s legal team has applied for an outside review — an institution established in 2018 to prevent abuse of the prosecution’s exclusive investigation power. A review board was organized eight times since, and the prosecution accepted its recommendations, albeit non-binding, every time.

The panel’s review last week on Samsung’s case took more than nine hours and examined the legal context, investigation process and economic conditions. Ten out of 13 panelists opposed an indictment of Lee. They disagreed that Samsung’s actions fell under fraudulent and unfair practices defined by the capital market act. It concluded that the prosecution won’t be able persuade the jury if the case includes civilian judgment.

The finding is recommendatory and advises the head prosecutor on the case to “respect” the review results. The prosecution could argue that the finding is unfair as the review is based on a 50-page summary of investigation reports spanning over 200,000 pages. The court has also advised the case be referred to the court since much of the evidence was already laid out.

But the prosecution could face a dilemma in pressing ahead with the criminal case. The laws to weaken the investigative power of the prosecution due to its past abusive practices have passed the legislature. The prosecution’s will for self-reform could be questioned at a time when it is sparring with the Justice Ministry if it ignores an institution it established for self-checking. It is the time for the prosecution to reach a prudent conclusion.

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