Samsung Chief Jay Y. Lee Cleared Of Charges In 2015 Merger Case

Samsung Electronics (005930.KS), opens new tab Chairman Jay Y. Lee was found not guilty of accounting fraud and stock manipulation by a Seoul court on Monday in a case about a 2015 merger that prosecutors said was designed to cement his control of the tech giant.

The ruling, which was a surprise to at least some analysts who had expected a suspended sentence, could help give Lee a freer rein in steering the country’s biggest conglomerate.

“For entrepreneurs and business leaders, their job is to drive innovation and create jobs, but Samsung hasn’t been able to do much of that for nine years because of legal risks,” said Kim Ki-chan, a business professor at the Catholic University of Korea.

Due to Lee’s legal problems, Samsung Electronics had become bureaucratic and risk-adverse, he added.

Lee, 55, and other former executives were accused of engineering a merger between two Samsung affiliates – Samsung C&T (028260.KS), opens new tab and Cheil Industries – in a way that rode roughshod over the interests of minority shareholders.

Prior to the merger, the Lee family and related entities controlled Cheil but not Samsung C&T (028260.KS), opens new tab which was a major shareholder in Samsung Electronics – the crown jewel in the Samsung conglomerate.

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.

The panel of three judges at the Seoul Central District Court said that the merger decision was reached by the boards of the two companies after their consideration and review.

“It cannot be concluded that the sole purpose was to strengthen management rights of defendant Lee Jae-yong and ease his succession within the Samsung Group,” Judge Park Jeong-je told a packed courtroom, using Lee’s Korean name.

All 14 defendants were acquitted.

The sentence prevents a return to jail for Lee who was convicted in 2017 of bribing a friend of former President Park Geun-hye. He served 18 months of a 30-month sentence and was pardoned in 2022 by current President Yoon Suk Yeol with the government saying he was needed to help overcome a “national economic crisis”.

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Source: Reuters