The prosecution’s allegations of the violation of the Financial Investment Services and Capital Markets Act of Korea, accounting fraud, and breach of trust are one-sided claims with no basis in evidence or legal principles, and are therefore not true.
It has been confirmed through the arrest warrant examination as well as court rulings on many related cases brought forth by interested parties, including the activist investor Elliott Management, that the Samsung C&T merger was a lawful business activity carried out for managerial needs such as compliance with government regulations, securing of management rights, and achievement of business synergy, and that all procedures were carried out in a lawful manner. Such rulings objectively confirm that the prosecution’s allegations do not constitute criminal offenses.
In regard to the alleged fraud on the accounting of Samsung Biologics, the financial authorities have changed their position on accounting practices multiple times, while twelve accounting experts have presented their opinions that the company did not violate the applicable accounting standards. The court likewise ruled that the company’s treatment of accounts cannot be seen as a violation of the accounting standards in issuing an injunction for stay of punitive measures by the Securities and Futures Commission and the arrest warrant examination for accounting fraud charges.
Even the prosecution’s Investigation Review Committee consisting of civilian experts, upon careful review of the claims and evidence presented by the prosecution and the defence from the objective third-party point of view, concluded by an overwhelming majority vote of 10:3 that the prosecution should discontinue the investigation as the case was not indictable.
The decision of the Investigation Review Committee represents the public’s decision, which has been respected and given deference by the prosecution until now (8 total). However, the prosecution has chosen to make an exception for this case and push ahead with indictment.
Every piece of detail and evidence presented by the prosecution today has already been thoroughly reviewed at the arrest warrant examination and by the Investigation Review Committee, and merits no rebuttal.
The indictment is in defiance of both the will of the public and the rational judgment of the judiciary branch. Not only does it go against the principle of legal fairness, it also damages the public trust in the prosecution.
It is completely unacceptable to the defendants, who have put their trust in the prosecution to engage in a fair decision-making process and have endeavored to protect their rights throughout the process.
Moreover, the prosecution newly added the charge of breach of trust in the indictment process, which was never mentioned during the arrest warrant examination nor the Investigation Review Committee’s review.
The prosecution was unable to include the charge of breach of trust because doing so would go against the Supreme Court’s consistent ruling that does not recognize directors’ breach of trust against shareholders, and because the company has in fact benefited from the merger by acquiring shares of Samsung Biologics, which now posts a market capitalization of KRW 53 trillion. The prosecution’s sudden decision to include the charge of breach of trust in the indictment process constitutes a serious infringement of the defendants’ right to defense and denies the purpose of the existence of the Investigation Review Committee.
In addition, the prosecution has not been able to write a single word on the merger ratio in its charges against the defendants, as it has been concluded that there was no manipulation of the merger ratio. We cannot understand why the prosecution views a standard corporate merger with the merger ratio determined by market value of shares in accordance with Korean laws without any manipulation as a criminal act.
In this case, the prosecution has exhibited a series of unreasonable actions: when the defendants requested the case to be reviewed by the Investigation Review Committee, the prosecution promptly filed for an arrest warrant; and when the Investigation Review Committee reached the overwhelming majority decision that the investigation should be discontinued and the case dropped, the prosecution instead included the charge of breach of trust, which it did not submit to the Investigation Review Committee.
Such actions make us believe that the prosecution started its investigation after having already decided to indict Samsung Group and Mr. Jae Yong Lee, rather than investigating to find substantive truth supported by evidence.
Moreover, the charges against the defendants as presented by the prosecution are identical to the arguments presented by the activist investor Elliott Management, which opposed the merger, during its Investor-State Dispute tribunal case against the Korean Government.
The prosecution claims that it had reached the decision to proceed with the indictment through senior prosecutors’ meetings and after having received input from experts, but such are nothing more than expedient devices for overturning the decision made by the Investigation Review Committee, which was set up precisely to implement democratic control over the prosecution’s authority. We seriously wonder how reaching an intended conclusion through arbitrary selection of participants and experts who are only provided with materials supporting the prosecution’s claims can justify the indictment.
Such is not only unacceptable but pitiful.
The defendants will faithfully participate in the trial, and will show in court that the prosecution’s indictment was unjust.
Looking around us, everyone is struggling to get through harsh times. The prosecution’s indictment will surely add to the difficulties of Samsung Group and the defendants, but we will stay focused and do our best as members of society to contribute to overcoming the hardship upon us all.