SAMSUNG ELECTRONICS & WELSTORY RAIDED

[Anchor Lead]

Prosecutors have raided the headquarters of Samsung Electronics and Samsung Welstory. This comes nine months after a complaint was filed to the Fair Trade Commission accusing the firm of providing unfair benefits to its cafeteria business unit. Eyes are on whether the probe will expand to Samsung heir apparent Lee Jae-yong's succession.

[Pkg]

Samsung Welstory has provided catering services to four Samsung Group subsidiaries since 2013. Samsung C&T, whose major shareholder is Lee Jae-yong, holds a 100 percent stake in the company. Last year the Fair Trade Commission concluded that Samsung Group systematically meddled to provide unfair benefits to Welstory. The FTC imposed a record fine of 230 billion won and filed complaints against Samsung Electronics and its former Future Strategy Office chief Choi Gee-sung.

[Soundbite] Yook Sung-kwon(FTC(June 2021)) : "Welstory, owned by Lee Jae-yong's family, was given 100% of Samsung's in-house cafeteria business without considering or comparing business partners in a rational way."

Seoul prosecutors raided the headquarters of Samsung Electronics and Welstory nine months after the complaints were filed. They obtained electronic files on the companies' in-house cafeteria business. Eyes are on whether the investigation will be expanded to Lee's hereditary succession. The FTC earlier found that Welstory provided a large sum of funds for the merger of Samsung C&T and Cheil Industries, as shareholder dividends were expanded in the process. Another factor is that last week more prosecutors were allocated to the Anti-Trust Trade and Tax Investigation Department, which is in charge of investigating Welstory. Prosecutors say despite various concerns, they are investigating the matter in an impartial and strict way. Samsung Electronics and Samsung Welstory have not announced their stances yet.