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Samsung Chief Lee Jae-yong Acquitted of Financial Crimes

The Seoul Central District Court has acquitted Samsung Electronics Chairman Lee Jae-yong of charges related to stock price manipulation and accounting fraud in connection to the 2015 merger between Samsung C&T and Cheil Industries.

Lee Jae-yong Acquitted of Financial Crimes

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The court’s decision, on Monday, had a development in the legal troubles surrounding the Samsung heir, less than two years after his pardon in a separate bribery conviction.

The prosecutors had a five-year jail term for Lee Jae-yong, alleging that the merger was unlawfully conducted to strengthen his control over Samsung Electronics, South Korea’s largest conglomerate.

However, the court ruled that the prosecution failed to prove the unlawful nature of the merger planned at consolidating Lee’s management rights.

This verdict could have implications, providing Lee with more flexibility in steering Samsung. The ruling is a relief for Samsung Electronics, as it clears Lee Jae-yong of charges related to the 2015 merger, which prosecutors argued disregarded the interests of minority shareholders.

The court’s decision also follows a history of legal leniency toward white-collar crime in South Korea and preferential treatment for convicted tycoons.

Lee Jae-yong had previously served 18 months in prison after being convicted in 2017 for bribery charges related to the same 2015 deal.

His release on parole in 2021 and pardon by President Yoon Suk Yeol in 2022 had already stirred debates about the handling of white-collar crimes in the country.

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While some argue that the ruling protects conglomerate heads and concerns about the fairness of the legal system, others see it as a turning point for Samsung and Lee Jae-yong. The legal troubles surrounding Lee Jae-yong had created a bureaucratic environment within the company.

The charges against Lee and other former executives centered on allegations of a merger between Samsung C&T and Cheil Industries, favoring the Lee family’s control over the conglomerate.

Before the merger, the Lee family controlled Cheil, but not Samsung C&T, a shareholder in Samsung Electronics.

The panel of three judges at the Seoul Central District Court dismissed claims that the merger decision was at strengthening Lee Jae-yong’s management rights.

Instead, they addressed that the merger was made after careful consideration and review by the boards of the two companies.

The acquittal has all 14 defendants, preventing Lee from returning to jail. The legal resolution, if prosecutors choose not to appeal, would be the end of Lee’s legal issues dating back to 2016. Lee Jae-yong’s lawyer, Kim You-jin, expressed gratitude for the court’s wise decision.

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Some business experts in South Korea express concern about the fairness of the country’s markets and the credibility of its judiciary.

Sung-In Jun, an economics professor at Hongik University in Seoul, criticizes the decision, stating that it confirms a judicial system that is more backward than it was in the past and the apparent powerlessness of South Korean authorities in the face of chaebol.

The legal problem involving Lee began in the aftermath of protests in Seoul that led to the 2016 impeachment of former President Park Geun-hye.

Lee Jae-yong was arrested in 2017 on charges of bribing Park and her confidante, Choi Soon-sil, to secure government support for the 2015 merger.

The prosecutors argued that the merger was a step in Lee’s effort to transfer control of Samsung from his father, Lee Kun-hee.

The Permanent Court of Arbitration in The Hague ordered the South Korean government to pay U.S. hedge fund Elliott $108.5 million for the National Pension Service’s role in approving the $8 billion merger.

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