Samsung chief Lee Jae-Yong cleared of 2015 merger case charges
The court says they did ‘not recognize the intention to harm shareholders’ through the merger
On Monday, a South Korean court acquitted Samsung Electronics chief Lee Jae-yong of a raft of crimes linked to a controversial 2015 merger, the Yonhap News Agency reported.
Yonhap reported that the court said they did “not recognize the intention to harm shareholders” through the merger, which critics had claimed was wrong value and mainly done to ensure a smooth third-generational power transfer to Lee, a scion of Samsung’s founding family.
“Solidifying Lee’s control and ensuring his succession wasn’t the only purpose of the merger,” according to the Yonhap report, the court ruled that there were “no validations to prove prosecution’s charge.”
The Seoul Central District Court verdict clears Lee of several charges, including stock price rigging, breach of trust, and accounting fraud in the 2015 merger between Samsung C&T and Cheil Industries.
Critics argue that the 2015 takeover deliberately undervalued the construction firm’s stock price, unfairly affecting its shareholders.
Lee, who has already served jail time over a high-level fraud and embezzlement case, is the current executive chairperson of Samsung Electronics, the crown jewel of the sprawling Samsung group.
In the deal, three C&T shares were offered for one Cheil share, which prosecutors claimed had “undermined the fundamentals of the market,” according to an earlier Yonhap report.
In the merger process, “multiple illegal acts were mobilized… for the smooth succession of the group chief”, the prosecution said in its closing argument in November, demanding a five-year sentence.
“A structure in which company’s owner groups are allowed to pursue personal interest is the biggest cause of the worsening Korea discount,” the prosecution said, referring to the perceived global undervaluing of South Korean businesses.
“We feel utterly distressed it was done by Samsung, the country’s number-one company.”
No personal interest
Lee said in court that he had not been driven by “personal interest in the merger.”
“I swear I had never imagined increasing my stake at the expense of causing damage to other shareholders,” he was reported by Yonhap as saying in his closing argument.
The verdict comes almost three years after the first court hearing, with over 100 hearings being held since.
Lee spent 18 months in jail after a fraud and embezzlement conviction that followed a sweeping investigation that also brought down former president Park Geun-hye in 2017.
Lee was released on parole in August 2021, having served half his sentence.
He returned to management shortly after his release. He was officially named executive chairperson of Samsung Electronics in October 2022, two months after South Korea’s president pardoned him for the embezzlement and corruption convictions.
Source: AFP
