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Samsung heir target of arrest warrant request for alleged accounting fraud

Jay Y. Lee, who had acted as the de facto head of Samsung, had previously been convicted of bribery, perjury and embezzlement.

Samsung heir Jay Y. Lee is reportedly the target of an arrest warrant related to alleged accounting fraud.
Chung Sung-Jun/Getty Images

Prosecutors in South Korea on Thursday requested a warrant for the arrest of Samsung heir Jay Y. Lee. Their investigation focuses on a controversial 2015 merger and an alleged accounting fraud tied to his suspected succession bid at the electronics giant, Reuters reported late Wednesday.

Lee, who had acted as de facto Samsung head since his father, Lee Kun-Hee, suffered a heart attack in 2014, had faced up to 12 years in prison in an investigation of the merger. His case was part of a corruption scandal that led to the impeachment of now-former South Korean president Park Geun-hye.

Lee was sentenced to five years in prison in 2017 after being found guilty of bribery, perjury and embezzlement. His sentence was reduced from five years to two-and-a-half years before being suspended.

He had always denied the allegations in court, but now he faces a return to jail after his 2018 release based on suspicions of stock price manipulation and audit rule violations, Reuters reported.

Lee has been a central figure into an investigation of alleged accounting fraud at drug firm Samsung Biologics after the firm's value increased by 4.5 trillion won ($3.7 billion) in 2015, Reuters reported. That, in turn, help boost the value of its major owner, Cheil Industries, of which Lee is its greatest shareholder.

Lee was accused of bribes made as part of an alleged exchange to get the government-controlled South Korean pension fund to back a 2015 merger between two Samsung Group holding companies. The polarizing merger, between Samsung's C&T construction and trading business and its Cheil Industries chemicals business, helped solidify the Lee family's hold on Samsung Group.   

Samsung didn't immediately respond to a request for comment.