
Samsung Electronics Chairman Lee Jae-yong was acquitted by an appellate court on Monday, clearing him of all charges related to a contentious merger between Samsung affiliates in 2015.
The decision, arriving about a year after the initial verdict found Lee not guilty, lifted a weight off the Samsung chief, allowing him to focus on steering the tech giant to tackle various challenges.
On Monday afternoon, Lee arrived at the court in Seocho-gu, southern Seoul, to attend his hearing but did not make any comments.
In upholding a lower court’s ruling, the judges at the appellate court said that prosecutors failed to prove charges beyond a resonable doubt.
In 2020, Lee was indicted for allegedly orchestrating various irregularities, including stock manipulation and accounting fraud, in connection with the high-profile 2015 merger of Cheil Industries and Samsung C&T. Prosecutors argued that these actions were intended for Lee to cement his grip of South Korea’s biggest conglomerate at a lower cost.
As part of the deal, three shares of Samsung C&T, a construction and engineering affiliate, were offered for one share of Cheil Industries, a textile arm.
At the time, Lee, then vice chair of Samsung Electronics, was the largest shareholder of Cheil with a 23.2 percent stake, but had no direct ownership in Samsung C&T. Prosecutors alleged that Lee and Samsung’s key executives manipulated stock prices by inflating Cheil’s values while depreciating Samsung C&T to create a favorable merger ratio.
With the deal, Lee became the largest shareholder of the merged entity, Samsung C&T, a major shareholder of Samsung Electronics and the group’s de facto holding unit. The merger ultimately allowed Lee to succeed as the heir of the family-controlled group from his father, Lee Kun-hee.
Prosecutors also contended that Lee was involved in fraudulent accounting practices at Samsung Biologics, a Cheil subsidiary, by more than 4 trillion won ($2.72 billion), to boost Cheil’s worth ahead of the merger.
Last February, the Seoul Central District Court cleared Lee and other Samsung officials of all 19 charges, ruling that Lee’s succession was not the sole purpose of the merger. The court also found no evidence to support that the merger ration was unfair or that it inflicted financial damage to shareholders.
The prosecution appealed the decision and sought for a five-year jail term with a fine of 500 million won.
The Monday’s ruling resolved some uncertainties for Lee, who has been entangled in legal troubles for years.
In a separate conviction tied to the same merger, Lee served 18 months in prison from 2017 for bribing former President Park Geun-hye and her close confidante to gain government support for the deal. He was later pardoned by Park’s successor, Moon Jae-in, in 2021.
With the legal uncertainties behind him, Lee is expected to shift his focus to addressing Samsung’s disappointing earnings and efforts to catch up with rivals in the pivotal AI chip sector.
By Ahn Sung-mi (sahn@heraldcorp.com)