Samsung CEO Cleared in Serious Case Involved Since 2015

On Monday, a Seoul court cleared Samsung Electronics Chairman Lee Jae-yong over the contentious 2015 merger of two Samsung affiliates that were purportedly carried out to facilitate his takeover of the largest conglomerate in South Korea.

Three years and five months after being charged with participating in market irregularities in the merger of Cheil Industries Inc. and Samsung C&T Corp. to maintain his managerial control over the group at a reduced cost, Lee was found not guilty by the Seoul Central District Court.

During the contentious 2015 merger—three Samsung C&T shares were given for one Cheil share—Lee was accused of stock price manipulation, violation of trust, and accounting fraud, according to the Yonhap news agency.

Given that Lee Kun-hee, his father, had suffered a heart attack the year before, the merger was seen to be essential to Lee’s succession as the group’s heir.

Prosecutors believed that the group engaged in a number of unfair practices, such as spreading misleading information about the market, buying large quantities of the affiliates’ stock, and illegally pressuring the National Pension Service, a significant shareholder in Samsung C&T, to support the merger, in order to manipulate the stock market and drive down Samsung C&T prices.

With a 23.2 percent stake in Cheil, Lee was the largest shareholder, and prosecutors thought that these violations had been pursued since 2012 in order to strengthen his influence on Samsung C&T, the de facto holding company of the Samsung Group.

The court declared the acquittal after concluding that Lee’s succession plan was lawful.

The court found no proof that the 2015 merger caused financial losses for shareholders, nor that Lee’s accession as group chairman or the consolidation of his influence over the firm was the only reason for the merger.

Additionally, the court ruled that Lee was not guilty of any role in the alleged accounting fraud at Samsung Biologics, a Cheil Industries affiliate.

The court said, “None of the criminal charges in this case have been proven.”

Lee’s side applauded the verdict of not guilty. Following the punishment, a representative for Lee told reporters, “I truly appreciate the court’s wise decision.”

The prosecution has one week to file an appeal of the court decision.

Choi Gee-sung, the former director of Samsung’s now-closed Future Strategy Office, along with two other former employees, and ten other people, were all found not guilty of any crimes pertaining to the merger in the verdict.

The prosecution had sought a five-year jail term for Lee in addition to a 500 million won ($373,550) fine, citing him as the main culprit behind the purported manipulation scheme.

Lee has refuted the accusations, stating that the affiliate merger did not take his personal interests into account. In addition, he begged the court to clear him so he could “focus all resources on moving the company forward.”

In a bribery case involving the deposed former president Park Geun-hye, Lee was found guilty and given a 2 1/2 year jail sentence. He served the time until being released on parole in 2021. He received a special presidential pardon the next year, allowing him to regain all of his rights and resume his managerial position.