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The public interest center of the group MINBYUN-Lawyers for a Democratic Society and the economy and finance center of the group People’s Solidarity for Participatory Democracy hold a press conference in front of Seoul Central District Court in Seoul’s Seocho neighborhood on Feb. 17. (Lee Jeong-a, staff photographer)

Former Samsung C&T shareholders have filed suit to demand compensation from Samsung Electronics Vice Chairman Lee Jae-yong and others, claiming that they suffered losses due to Samsung deliberately lowering Samsung C&T’s value during its merger with Cheil Industries in 2015.

The public interest center of the group MINBYUN-Lawyers for a Democratic Society and the economy and finance center of the group People’s Solidarity for Participatory Democracy (PSPD) held a press conference in front of Seoul Central District Court in Seoul’s Seocho neighborhood on the afternoon of Feb. 17 to explain the background behind the legal action. The first suit has 32 shareholders taking part (representing 35,597 total shares). A legal team consisting of attorneys from MINBYUN and PSPD plans to recruit additional individual Samsung C&T shareholders and organizational investors as plaintiffs going forward.

The defendants from whom compensation is being demanded include not only Lee and the Samsung C&T corporation but also Samsung C&T and Cheil Industries directors and auditing committee members who approved the merger and corporations, CEOs, and accounting firms that took part in accounting fraud by Samsung BioLogics. Many of the same people are currently being investigated by prosecutors on charges of deliberately lowering Samsung C&T’s value and artificially propping up Cheil Industries’ value for the sake of the merger, which benefited Lee as Cheil Industries majority shareholder.

During the press conference that day, MINBYUN and PSPD noted that six of the directors who agreed to the merger ratio (Cheil Industries:Samsung C&T=1:0.35) in 2015 -- a ratio seen as damaging to Samsung C&T -- are still serving as directors. Arguing that the most urgent order of business is to remove those six directors and reform the board of the directors, PSPD Secretary-General Park Jeong-eun said, “There’s a [Samsung C&T] general shareholders’ meeting coming up in March, and we need to hold the people who harmed Samsung C&T and the National Pension Service accountable before then.”

The press conference also included criticisms of the court hearing Lee’s bribery case following a reversal and remand decision by the Supreme Court, which some have criticized for “going easy on Samsung” in its ruling with its unprecedented demand that the company institute a “legal compliance monitoring committee.” Kim Ye-ji, an attorney with the law firm Jihyang who is taking part in the legal team, said, “[Samsung] is slapping together a legal compliance monitoring committee at the court’s request when it should have already existed at the time the criminal acts were committee. This must not be reflected in the sentencing decision.”

“If the court decides to give Lee Jae-yong a suspended sentence rather than prison time, it will basically be declaring before the people of South Korea that there is no such thing as ‘equality before the law,’” she said.

The economic crimes division of the Seoul Central District Prosecutors’ Office, under chief prosecutor Lee Bok-hyeon, is currently ratcheting up investigations into the Samsung C&T merger and Samsung BioLogics accounting fraud, with former Samsung Future Strategy Office Director Choi Gee-sung and Samsung Electronics Business Support Task Force President Jung Hyun-ho summoned in turn for questioning. Some are predicting that Lee Jae-yong, who was the “ultimate beneficiary” of both the Samsung C&T merger and Samsung BioLogics accounting frauds, will also be summoned for questioning in the near future.

By Lim Jae-woo, staff reporter

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