Samsung chief acquitted of charges related to merger
Company to ramp up investments as chairman cleared of legal hurdles
A local court has acquitted Samsung Electronics Executive Chairman Lee Jae-yong of stock price rigging and accounting fraud charges involving the 2015 merger of two affiliates. The verdict clears the path for the chairman to resume full-scale business activities for the group, including pursuing large-scale acquisitions.
The Seoul Central District Court cleared Lee of the allegations regarding the merger of Samsung C&T and Cheil Industries, which, according to the prosecution, was intended to allow him to illegally inherit management control over the group from his father.
The court also acquitted former Samsung executives of any involvement in the alleged crime.
The presiding judge said it is unclear whether the merger was intended only for Lee to inherit management control over Samsung and tighten his grip over the conglomerate.
“It is difficult to see that the stock exchange ratio between Samsung C&T and Cheil Industries was unfair,” the ruling read. “The merger does not seem to be intended to damage shareholders.”
The judge said the merger was beneficial to Lee’s control over the group, but highlighted that the two affiliates had deliberated on the necessity of the merger, acknowledging its business relevance.
The ruling came three years and five months after prosecutors indicted Lee. Last November, the prosecution sought a jail term of five years and a 500 million won ($373,000) fine for the chairman.
During his trial, Lee was also sent to jail in January 2021 on charges of bribing impeached President Park Geun-hye to win the administration’s support for the merger. He was released on parole in August that year and President Yoon Suk Yeol pardoned him a year later.
Although it is expected to take several more years for an appellate court and the Supreme Court to arrive at rulings on Lee’s allegations, legal experts expect the upper courts to reach similar conclusions.
In his concluding testimony last November, the Samsung chairman urged the court to give his company an opportunity to concentrate on moving forward, especially in the face of escalating geopolitical risks.
After the ruling, Lee’s attorney issued a short statement expressing gratitude over the court’s decision.
Financial Supervisory Service Governor Lee Bok-hyun, a former prosecutor who led investigations into the Samsung chief, told reporters on Monday morning that the court ruling will settle legal risks surrounding the company.
“I hope the court ruling unshackles Samsung and Lee, so that the company can reform its management and contribute to the national economy,” the governor said.
Securities analysts also expect the nation’s largest conglomerate to pursue aggressive investments under Lee’s leadership.
Samsung has never carried out a large-scale acquisition since 2017 when it purchased Harman for $8 billion, although its executives have continuously hinted at the Korean firm’s takeover of promising companies here and abroad.
“Despite Lee’s appointment as the chairman in 2022, uncertainties over his sentence have made it difficult for him to conduct a large-scale investments or increase shareholder returns,” Hi Investment & Securities analyst Lee Sang-heon said. “The court ruling paved way for him to manage the conglomerate in his own style.”
Securities analysts also expect Lee to re-register as a Samsung Electronics director.