Why the Prosecution Investigation Review Committee Exists: May the Right to Defense Not Be Denied to Samsung Alone

More Than 50 Search and Seizure Operations Over 1 Year and 8 Months of the Samsung Investigation

We Hope for a Wise Decision from the Prosecution Investigation Review Committee

Before prosecutors indict Lee Jae-yong, Vice Chairman of Samsung Electronics, who has been under investigation over allegations of the illegal succession of Samsung’s management control, the Prosecution Investigation Review Committee is set to determine on the 26th whether an indictment is appropriate.

The Review Committee forms a Special Committee to deliberate on matters such as whether to bring charges. The Special Committee is composed by randomly selecting 15 members, from among the 250 members listed on the Prosecution Investigation Review Committee roster, who are available to attend on the date of deliberation. The Special Committee consists of figures from various sectors of society, including the legal community, academia, the media, and civic groups. At least 10 members may deliberate on a case, and decisions are made in closed session by a majority vote of members present.

Introduced in 2018, the Prosecution Investigation Review Committee system is a body that evaluates the appropriateness of prosecutorial investigations. It deliberates and resolves not only whether to indict or not indict, but also whether an investigation should continue and whether it is appropriate to request an arrest warrant. Legal circles are currently divided over what the final decision of this Review Committee will be, and various views are being expressed. Some expect a recommendation to indict, arguing that the investigation has already progressed substantially, sufficient evidence has been collected, and the Supreme Court has already confirmed the bribery paid to Choi Soon-sil in connection with management succession, which they say will serve as an important factor in reviewing the illegality of the succession process in this case. Others in the legal profession say that because the matter is ultimately to be judged by the public, the outcome is difficult to predict.

Meanwhile, Yang Chang-soo, chair of the Prosecution Investigation Review Committee, had ruled not guilty during his tenure as a Supreme Court justice in the “Everland convertible bonds (CB) issue at below-market prices” case. When controversy arose over his qualifications based on his relationship with Vice Chairman Choi Gee-sung and the fact that his brother-in-law serves as president of Samsung Medical Center, he announced that he would recuse himself from performing his duties as chair. Chairman Yang’s position is highly commendable as a very wise decision reflecting his intention to handle the work of the Supreme Prosecutors’ Office Prosecution Investigation Review Committee objectively and fairly.

Looking at how this case has unfolded so far, the battle between the prosecution and Samsung Vice Chairman Lee Jae-yong can now be seen as having entered its third round. Prosecutors maintain that Lee was involved in the 2015 merger between Cheil Industries and Samsung C&T and in accounting fraud at Samsung Biologics, while Samsung’s position is that Vice Chairman Lee “was neither involved nor engaged in any wrongdoing.”

Prosecutors regard the merger between Cheil Industries and Samsung C&T as part of Vice Chairman Lee’s succession to control of Samsung. They concluded that the value of Cheil Industries, in which Lee held a stake, was inflated, while the value of Samsung C&T, in which he held no stake, was reduced, and that accounting fraud at Samsung Biologics, an investment of Cheil Industries, was carried out to raise Cheil Industries’ valuation. The prosecution’s claims were reported daily through parts of the media, rendering the ban on public disclosure of alleged criminal facts, implemented in December last year, effectively meaningless.

Samsung, by contrast, argues that managing stock prices is something any corporation does, with treasury stock buybacks and dividends being representative examples, and stated that Samsung Electronics has regularly conducted treasury stock buybacks and quarterly dividends since 2015.

The investigation into Samsung has been underway for 1 year and 8 months since November 2018, involving more than 50 search and seizure operations and approximately 430 summons interrogations of around 110 people. Under such circumstances, it is difficult to expect a company to maintain normal business operations.

The issues in this case may be summarized as follows: to what extent Samsung’s actions should be regarded as normal management activities, and how much Vice Chairman Lee knew about the matter. Samsung’s best-case scenario would be for a recommendation of non-indictment, but under the current system, even if such a recommendation is issued, prosecutors are not required to follow it.

Regardless of the direction of the Review Committee’s deliberation and resolution, prosecutors appear highly likely to indict Vice Chairman Lee and others. If they do not indict, their investigation up to this point would lose its justification and legitimacy, placing the prosecution in an awkward position.

The Prosecution Investigation Review Committee was originally introduced by the prosecution itself as part of its internal reform measures. Its stated purpose was to improve the appropriateness, fairness, and transparency of prosecutorial decisions by hearing the opinions of outside experts such as attorneys when deciding whether to indict in cases that raise public suspicion or attract broad social attention. Both prosecutors and other case-related parties, including suspects, may request that the Review Committee be convened, but criticism has persisted that it has so far been used as a device for the prosecution to evade responsibility. In the 2 years and 5 months since the system began operating, the Review Committee has deliberated only 8 cases. Of those, in 7 cases—the overwhelming majority—the applicants were the prosecution’s own investigative teams, while the remaining 1 case was requested by a police officer under investigation for alleged public disclosure of criminal allegations.

It is by no means desirable for the Prosecution Investigation Review Committee to appear as though it is becoming an arena for a power struggle between the chaebol and the prosecution. One can only hope that this system will be faithfully operated and firmly established in accordance with one of its principal original purposes and backgrounds at the time of its enactment: “a system intended to enhance public trust and guarantee and establish the suspect’s right of defense.”

Wanjin Choi, Professor, Hankuk University of Foreign Studies Law School

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Original title: 검찰수사심의위 존재의 이유 '방어권' 삼성만 예외 아니길

Author: Wan-jin Choi

Date: 2020-06-24

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=20&idx=22880