The arrest warrant for Samsung Electronics Vice Chairman Lee Jae-yong, who was charged with misconduct in the process of strengthening Samsung Group's management control, has been rejected.
The arrest warrants for Choi Ji-sung, former head of the Future Strategy Office, and Kim Jong-joong, former head of the Future Strategy Office's strategy team, were also rejected.
Won Jeong-sook, a senior judge in charge of warrants at the Seoul Central District Court, rejected the arrest warrant at around 2 a.m. on June 9, saying, "There is a lack of explanation on the necessity and significance of arresting suspects against the principle of non-arrest trial."
The prosecution and Samsung had a fierce battle over the vice chairman's charges during an eight-and-a-half-hour hearing from 10:30 a.m. on June 8.
During the warrant review, the prosecution reportedly stressed that Vice Chairman Lee was involved in the "market price manipulation" and "illegal transactions" that intentionally float stock prices in order to successfully merge Samsung C&T and Cheil Industries.
On the other hand, Vice Chairman Lee flatly denied the charges, saying, "The private-sector trial has already ruled that the merger was legitimate. Lee has never ordered or been involved directly." In addition, Vice Chairman Lee, a global entrepreneur, is said to have stressed that there is no fear of fleeing or destroying evidence under the Criminal Procedure Act.
"The basic facts have been explained, and the prosecution seems to have already secured a considerable amount of evidence through the investigation," Won said. "Considering the importance of the case, it is reasonable to decide whether or not the suspects are responsible for the case and how much they should be judged after sufficient hearing during the trial process."
The move is interpreted as the court's acceptance of Lee's claim that there is no room to destroy evidence as the prosecution has already secured sufficient evidence by summoning about 30 Samsung executives over 100 times and conducting more than 50 raids.
As a result, Vice Chairman Lee, who was arrested in February 2018 for meddling in state affairs and was released on probation, is out of danger of being imprisoned again in two years and four months. Vice Chairman Lee, who was waiting at the Seoul Detention Center after completing a warrant review the previous day, immediately returned home.
Earlier on June 4, the Seoul Central District Prosecutors' Office requested arrest warrants for Vice Chairman Lee and two others on charges of violating the Capital Market Act in the merger process between Samsung C&T and Cheil Industries, as well as violating the Act on External Audit of Stock Companies.
The prosecution believes that there was an organized illegal act in the process of merging Samsung C&T and Cheil Industries in 2015. In the process, the investigation has been underway for a year and a half, believing that Vice Chairman Lee was reported or approved.
Prosecutors believe Samsung Biologics' alleged accounting fraud worth 4.5 trillion won (some $3.7 billion) at the end of the same year was also aimed at inflating the value of its parent company Cheil Industries to justify the merger, which was carried out in favor of Lee.
When the warrant was rejected, the prosecution said, "We accept the court's decision," adding, "Regardless of the outcome of the warrant trial, we will make every effort to investigate the case in the future in accordance with the law and principles."
The prosecution plans to conduct a supplementary investigation into how much Lee was involved in market price manipulation and accounting fraud, while deciding on the direction of judicial action for those involved, including the re-application of arrest warrants, to wrap up the investigation within this month.
Apart from the rejection of the arrest warrant, the prosecution will hold a prosecution citizens' committee meeting on June 11 to decide whether to hand over the case related to Lee to the prosecution's investigation review committee at the Supreme Prosecutors' Office. If the decision is made, outside experts will decide whether to indict him or not.
Meanwhile, shares of 15 Samsung Group affiliates, including Samsung C&T, Samsung Electronics, Samsung SDI, Samsung SDS, Samsung Electro-Mechanics, and Samsung Heavy Industries, are showing strong performance in the 1 to 3 percent range after the arrest warrant for Samsung Electronics Vice Chairman Lee was rejected.