Samsung Chairman Indicted

The independent counsel investigating Samsung Group’s corruption allegations indicted the group’s Chairman Lee Kun-hee and nine former and incumbent executives without detention on charges of breach of trust and tax evasion Thursday.

Those indicted include Vice Chairman Lee Hak-soo; President of strategic planning office Kim In-joo; Vice President of strategic planning office Choi Kwang-hae; head of Samsung SDS U.S. branch Park Joo-won; President of Samsung Card Yoo Suk-ryul; former chief secretary for the chairman Hyun Myung-kwan; former head of Samsung SDS Kim Hong-ki; head of Samsung Fire and Marine Insurance Hwang Tae-sun; and director of Samsung Fire and Marine Insurance Kim Seung-eon.

The special prosecution team led by prosecutor Cho Joon-woong held a press conference at 2 p.m. Thursday at the special prosecution building in Hannam-dong in central Seoul and announced the final investigation results, wrapping up his 99-day probe that began on Jan. 10.

On the allegation of illegal transfer of the group’s managerial right to Lee Jae-yong, Chairman Lee’s son, the prosecution indicted key officials of the strategic planning team, including Lee Hak-soo, Kim In-joo, Hyun Myung-kwan, and Yoo Suk-ryul, for causing losses amounting to at least 96.9 billion won to Everland by issuing convertible bonds at a giveaway price and transferring them to Lee Jae-yong.

For the allegation of illegal amassing of slush funds, Chairman Lee, Lee Hak-soo, Kim In-joo, and Choi Kwang-hae were accused of tax evasion. The special prosecution team found that they managed 4.5 trillion won worth of assets through 1,119 borrowed-name accounts. In the process, they evaded 112.8 billion won worth of transfer income taxes on 564.3 billion won earned by securities transactions at affiliates.

Chairman Lee has been also indicted for breaching the securities transaction law because he did not report changes in securities possession to the securities supervising authorities.

Park Joo-won, Kim Hong-ki, and Yoo Suk-ryul were charged with breach of trust, Hwang Tae-sun with embezzlement, and Kim Seung-eon with violation of the special prosecution law (destruction of evidence).

The special probe team has finalized all the investigations without relegating them to the prosecution.

On the suspicion of illegal lobbying of high-ranking government officials including prosecutors, the special prosecutor cleared Chairman Lee of the allegation due to lack of evidence.

The special counsel also said it has found no evidence that Samsung had provided key government officials with funds for the 2002 presidential election and that Samsung affiliates, including Samsung Heavy Industries, had committed accounting frauds.

"They deserve heavy punishment in court because their crimes involve an astronomical amount of money,” said special prosecutor Cho Joon-woong in the press conference. “We indicted them to address the long-held illegal management practices in the nation’s conglomerates by subjecting them to severe punishment. In this sense, the charges are different from the conventional charges the prosecution has applied to those who evaded taxes and breached trust,” he said.

On Chairman Lee’s tax evasion charge, the group explained in a press release, “Tax evasion has occurred in the process of share dispersion to protect management rights. So, this case is different from other tax evasion cases in terms of purpose, process and content.”

dnsp@donga.com jhk85@donga.com