Focused on Accounting Fraud Charges in Prosecutor's Appeal Trial
Samsung Electronics Chairman Lee Jae-yong is heading to the courtroom on the 30th for the first formal appeal trial of the 'unfair merger between Samsung C&T and Cheil Industries and the accounting fraud allegations of Samsung Biologics' held at the High Court in Seocho-gu, Seoul. Photo by Jo Yong-jun jun21@
On the 14th, the court accepted a change to the indictment in the appeal trial of Samsung Electronics Chairman Lee Jae-yong on charges of 'unfair merger and accounting fraud,' adding the Seoul Administrative Court's ruling related to Samsung Biologics.
The Criminal Division 13 of the Seoul High Court (Presiding Judges Baek Gang-jin, Kim Seon-hee, and Lee In-su) held a hearing for Lee's appeal trial and approved the prosecution's request to amend the indictment. Earlier, on the 27th of last month, the prosecution added a preliminary charge reflecting the August ruling of the Seoul Administrative Court regarding Samsung Biologics.
The Administrative Court had previously ruled in August that the financial authorities' sanctions against Samsung Biologics were unlawful, siding with Samsung Biologics. However, it also recognized some accounting fraud charges, stating, "Reviewing the loss of control accounting treatment over Samsung Biologics Epis after the merger date of former Samsung C&T on September 1, 2015, constitutes an abuse of discretion." This differs somewhat from the first trial court in Lee's case, which acquitted him completely of the accounting fraud charges.
At that time, the Seoul Administrative Court judged that Samsung Biologics' loss of control accounting treatment over Samsung Biologics Epis in 2015 "was done primarily to avoid issues such as capital erosion, without any reasonable justification," thus violating accounting standards.
This effectively acknowledged that there was some accounting fraud by Samsung Biologics during the 2015 merger process between Samsung C&T and Cheil Industries.
The prosecution plans to focus on proving Lee's accounting fraud charges based on the first trial ruling of the Seoul Administrative Court to overturn the first trial results. Previously, the court also accepted the prosecution's request to amend the indictment with detailed facts on ten items, including ▲ initiation of transactions through formal board resolutions and breach of duty ▲ sudden sale of Samsung C&T treasury stocks to secure voting rights ▲ false announcements regarding the Nasdaq listing plan of Epis.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
