Judge in Lee Jae-yong Trial Denies Admission of 'Samba Accounting Fraud Case Records' as Evidence

"Fact acknowledgment or sentencing considerations both unnecessary"
"This is not a trial to discuss specific succession issues"
Vice Chairman Lee likely to receive favorable ruling

[Image source=Yonhap News]

[Asia Economy Reporter Seongpil Cho] The retrial court for Samsung Electronics Vice Chairman Lee Jae-yong's state affairs manipulation case has decided not to admit the records related to the Samsung BioLogics accounting fraud allegations as evidence. This is expected to work in favor of Vice Chairman Lee in the upcoming verdict.

The Seoul High Court Criminal Division 1 (Presiding Judge Jeong Jun-young) held a retrial hearing for Vice Chairman Lee on the 17th and stated, "Among the evidence requested by the special prosecutor, evidence related to Samsung BioLogics' accounting fraud and evidence tampering in other cases will not be admitted." The court added, "Since this trial is not about examining specific issues as part of the succession process, there is no need to admit evidence from those trials for consideration." This rejected the special prosecutor's earlier request to submit some records from the ongoing investigation into Samsung BioLogics' accounting fraud allegations as evidence.

The core suspicion in this case is the succession process. The key issue is whether Vice Chairman Lee bribed Choi Seo-won (formerly Choi Soon-sil), a close aide to former President Park Geun-hye, with three horses and other items to receive help in Samsung's management succession, and whether former President Park assisted Vice Chairman Lee during the merger of Samsung C&T and Cheil Industries in return.

The prosecution's investigation into Samsung BioLogics' accounting fraud is also along this line. The essence of the investigation is to determine whether Samsung BioLogics' accounting was manipulated to secure a favorable merger ratio for Vice Chairman Lee during the merger process. This is why the special prosecutor sought to submit some records related to the Samsung BioLogics accounting fraud allegations as evidence. "The more favorable the merger ratio was to Cheil Industries, the higher the possibility of Vice Chairman Lee's succession. They aim to specifically prove what efforts Vice Chairman Lee and others made to raise Cheil Industries' stock price and lower Samsung C&T's stock price."

On the other hand, Vice Chairman Lee's defense argued, "The fairness of the merger ratio and accounting fraud are not issues under consideration in this trial and fall outside the scope of the indictment, so they cannot be valid grounds for sentencing." The court ultimately sided with Vice Chairman Lee. However, when the prosecution raised objections to the dismissal decision, the court decided to conduct further review and notify the results in writing.

At the hearing, CJ Chairman Sohn Kyung-shik was summoned as a witness but did not appear. Chairman Sohn submitted a letter of absence citing a business trip to Japan as the reason. Vice Chairman Lee's side said, "We thought he was the best person to testify about the relationship between the president and businesses as a senior figure in the economic community, but judging from the letter, he seems to feel considerable pressure," and withdrew the request. The court then canceled the decision to admit him as a witness. Vice Chairman Lee's side also announced they would withdraw witness requests for Professor Kim Hwa-jin of Seoul National University Law School and Wendell Weeks, Chairman of Corning Inc. The court decided not to make a decision on whether to cancel the witness admission for Professor Kim Hwa-jin and Professor Jeon Sung-in on that day.

Vice Chairman Lee was indicted on charges of requesting help from former President Park and Choi Seo-won for Samsung's management succession and restructuring of the governance structure, and providing bribes in return, including covering the equestrian training expenses for Choi's daughter Jung Yoo-ra, supporting the Korea Winter Sports Talent Center, and the Mir and K-Sports Foundations. The first trial found that the succession process existed and sentenced Vice Chairman Lee to five years in prison. However, the second trial ruled that the succession process itself did not exist and sentenced him to two years and six months in prison with a four-year probation. The Supreme Court's full bench overturned the lower court's ruling in the appeal trial and sent the case back to the Seoul High Court.