Prosecution appeal begins for Samsung chief Lee over 2015 merger case

By Ju-min Park

SEOUL (Reuters) - A South Korean high court began on Monday hearing a prosecution appeal over a decision by a lower court to clear Samsung Electronics chairman Jay Y. Lee of all charges in a case related to a 2015 merger of Samsung companies.

Prosecutors are appealing against a February ruling that found Lee not guilty of all charges including accounting fraud and stock manipulation.

Prosecutors had sought a five-year jail term. Lee denied wrongdoing, arguing that he and other executives acted on the belief the merger would benefit shareholders.

Lee was not required to attend Monday's preparatory hearing at the Seoul High Court. Preparatory hearings are conducted to set up future schedules.

Shim Gi-ho, one of the prosecutors, said the prosecution found the lower court's decision "difficult to accept" and proposed bringing 11 witnesses to the stand in the appeal.

Lawyers for Lee and other defendants opposed the proposal, saying the witnesses were neither independent from the case nor likely to reveal new facts.

Baik Kang-jin, the presiding judge, said the prosecution would have to present sufficient reasons for him to accept the request to call new witnesses.

The judge scheduled the next preparatory hearing for July 22.

Samsung Electronics declined to comment on the appeal.

Lee, 55, and other former executives had been accused of engineering a merger between two Samsung affiliates - Samsung C&T and Cheil Industries - in a way that dealt poorly with interests of minority shareholders.

The Seoul Central District Court acquitted Lee and 13 other defendants of all charges, saying that the merger decision was reached by the boards of the two companies after consideration.

Lee met Chinese Premier Li Qiang and other senior Chinese government officials on Sunday on the sidelines of a trilateral summit between South Korea, China and Japan in Seoul. At the meeting, Li told Lee that China welcomed further investment by Samsung, Chinese state media reported.

(Reporting by Ju-min Park; Additional reporting by Joyce Lee; Editing by Ed Davies and Mark Potter)