Samsung C&T and Cheil Industries – two Samsung Group subsidiaries – merged in 2015. Later in 2018, a number of current and former Samsung executives became a part of a lengthy investigation launched by the Financial Services Commission, alleging that the group had inflated Cheil Industries' value ahead of the Samsung C&T merger. One example of this is the land value of South Korea's largest theme park owned by Cheil Industries, called Everland, surging 370% percent in 2015 before the merger took place.
The merger helped Samsung's heir rise to power
At that time, Lee was the largest shareholder of Cheil Industries and didn't have a stake in Samsung C&T. The prosecutors suspect that the inflated value of Cheil before the merger was meant to favor Samsung's heir, who is now being investigated for committing a breach of trust and violating the Financial Investment Services and Capital Markets Act.
The recent investigation was apparently triggered by other allegations of accounting irregularities at Samsung Biologistics. Samsung C&T is the largest shareholder of Biologistics with a stake of 43.44%, and Samsung Biologistics is suspected to have inflated its earnings to show high potential for Cheil Industries' stake in the firm.
