Samsung chairman acquitted in merger case for bigger control over South Korea's largest company
Lee Jae-yong (Getty Images)
On Monday, a court in South Korea declared Samsung Electronics Chairman Lee Jae-yong not guilty of financial crimes related to a controversial merger between Samsung affiliates in 2015. The charges related to manipulating stock as this merger increased his control over South Korea's largest company, according to CNN and AP News.
"Prosecutors had sought a five-year jail term for Lee, who was accused of stock price manipulation and accounting fraud. It wasn’t immediately clear whether they would appeal. Lee denied wrongdoing in the current case, describing the 2015 merger as "normal business activity," the media says.
The court rejected prosecutors' arguments that Lee and other Samsung officials damaged shareholders through accounting fraud and manipulation of assets for the merger. It stated that the prosecution did not provide enough evidence to prove that the merger between Samsung C&T and Cheil Industries was unlawfully performed to strengthen Lee's control over Samsung Electronics.
Some shareholders opposed the merger, claiming it favored the Lee family over minority shareholders.
While some criticized the ruling as a setback for justice, business lobbies praised it, emphasizing the importance of Lee's leadership for Samsung amid increased competition. Samsung is having a tough time in business, losing to Apple in smartphone sales and facing a drop in profits.
Some activists and politicians are surprised by the decision, while experts think it might make foreign investors lose trust in the South Korean legal system. Lee was previously pardoned for bribery in a corruption scandal that led to the downfall of a previous South Korean government.
Public anger also arose over the national pension fund's stake reduction in the merged entity due to political pressure. The ruling was criticized for not prioritizing social justice and shareholder interests. The People’s Solidarity for Participatory Democracy, South Korea’s largest civic group, argued that the court favored Lee over shareholders and pensioners, whose retirement funds may have been affected by the deal.
Lee Jae-yong
Lee, a third-generation corporate heir, officially became chairman of Samsung Electronics in October 2022 and has led the Samsung group since 2014.
Previously, Lee served 18 months in prison for bribery charges related to the 2015 deal but was released on parole in 2021 and later pardoned by the president in 2022.
