South Korea seeks arrest of Samsung heir in succession probe

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South Korean prosecutors have requested an arrest warrant against Samsung Group heir Jay Y. Lee, they said on Thursday, in the investigation of a controversial 2015 merger and alleged accounting fraud in a suspected bid to aid his succession plans.

The move spells fresh trouble for Lee, who, if arrested, faces a return to jail just a little over two years after being released from detention in February 2018.

Lee already faces trial on a charge of bribery aimed at winning support to succeed ailing group patriarch Lee Kun-hee, and which involved former President Park Geun-hye, and spent a year in detention until the bribery case was suspended in 2018.

Prosecutors said they sought Lee’s arrest on suspicions of stock price manipulation and audit rule violations, among other offences.

In a statement, Lee’s lawyers expressed “deep regret” at the prosecution’s decision to seek his arrest, adding that he had fully cooperated with the investigation while Samsung was going through management crises.

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Shares of Samsung Electronics were up 0.4%, outperforming a rise of 0.2% in the benchmark KOSPI .KS11.

Prosecutors have been investigating suspected accounting fraud at drug company Samsung Biologics (207940.KS) after the Korean financial watchdog complained the firm’s value had been inflated by 4.5 trillion won ($3.7 billion) in 2015.

Prosecutors contend the violation helped boost the value of its major owner, Cheil Industries, which counted Lee as its top shareholder, and merged with Samsung C&T, a de facto holding firm, Yonhap news agency said.

Attorneys for Lee requested an outside review to weight the validity of the indictment and prosecutors are following the necessary procedures, they said in a statement.

Last month, the prosecutors questioned Lee, 51, over the latest investigation. He also apologized for the controversies around his succession planning and vowed to guarantee labour rights at Samsung.

In a statement, Samsung said seven of its affiliates, including Samsung Electronics, had set up a labour-management relations group under their boards to improve labour policy.

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Lee’s year in detention followed separate charges that he bribed Park to win government support for the 2015 merger that helped tighten his control of South Korea’s top conglomerate.

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