A South Korean court has acquitted Samsung chairman Lee Jae-yong in a stock price manipulation and accounting fraud case connected to the controversial merger of two company affiliates in 2015. The Seoul Central District Court ruled earlier today that the prosecution failed to sufficiently prove the charges against Lee, hence it found him not guilty. Prosecutors had sought a five-year jail term for the Samsung chief.
Samsung chairman avoids a third jail term, at least for now
Lee Jae-yong has been surrounded by several controversies over the past decade. He has already served jail terms twice in a 2015 bribery case involving former South Korean President Park Geun-hye. He spent more than a year in jail between 2017 and 2021 before eventually receiving a presidential pardon in 2022. In the meantime, the Korean state prosecution has been pursuing a separate court case against him.
It is connected to the high-profile, $8 billion merger of Samsung C&T and Cheil Industries in 2015. Lee had a 23.2 percent stake in the latter, and the merger helped him tighten his control of the new entity. It strengthened his chances of succeeding his father as the leader of the family-controlled electronics giant. However, prosecutors accused Lee of stock price manipulation and accounting fraud to his benefit.
The Samsung chief allegedly inflated the prices of Cheil and deflated the prices of Samsung C&T. He also allegedly disseminated false market information and approved other unlawful practices during the merger to reduce the value of Samsung C&T to aid his purposes, effectively causing massive financial losses to other investors. He always denied wrongdoing, saying the merger was part of normal business activity.
Court finds Lee not guilty due to the lack of evidence
Lee and two other senior Samsung executives were indicted in this case in September 2020. In November last year, prosecutors demanded a five-year jail term and a fine of KRW 500 million (approx. USD $386,000) for the Samsung chief. Prosecutors also demanded a 4.5-year jail term for the other two executives. However, the Seoul Central District Court ruled that there was not enough evidence suggesting Lee’s ill intentions.
“Even if Lee’s control has been strengthened, the merger in this case cannot be considered unfair, as long as there is a reasonable purpose for the merger,” said chief judge Park Jung-jae. Today’s reports don’t state whether the court also acquitted the other two Samsung officials indicted in this case. It is also unclear if prosecutors will appeal this ruling. If they don’t, it would come as a massive relief for Lee.