Two Figures Indicted For Issuing Everland CBs at Low Prices

The investigation concluded that Samsung Everland violated a law in the process of issuing convertible bonds (CBs) and distributing them to Lee Jae-yong, who is the first son of Samsung Group Chairman, Lee Gun-hee, and the executive director of Samsung Electronics.

The Special Division 2 at the Seoul Prosecutor’s Office indicted Heh Tae-hak (then president of Everland and current president of Samsung Oil Chemical Corporation) and Park Noh-bin (former senior executive director of Everland and current president of Everland) without detection for breaching a law relating to the Special Economic Crimes.

This will affect Chairman Lee and his son – making it inevitable for them to be investigated by the prosecution.

According to the prosecution, President Huh issued 9.9 billion won worth of Everland CBs in November of 1996, of which only 300 million won worth of CBs were distributed to Cheil Jedang and the remaining 9.6 billion won worth of CBs were allegedly given to the four children of Chairman Lee through the decisions made by the board of directors.

In turn, Everland allegedly evaluated each share as 7,700 won for the CBs presented by Lee’s children, which made some 1.254 million shares.

At that time, the share price of Everland stood at 85,000 to 230,000 won per share and if the lowest price was given, this would amount to some 96.9 billion won worth of damages for the company, explained the prosecution.

Through the above process, Lee Jae-yong literally became the largest shareholder of Everland with 25.1 percent shares (and Everland’s 19.3 percent shares of Samsung Life Insurance).

An official from the prosecution said, “Concerning the controversial allegations about their tax evasion on donation tax and illegal inheritance, we could not come to a conclusion yet due to the complex evaluation process of practical damages.”

buddy@donga.com myzodan@donga.com