Samsung Boss, Lee Jae-yong, Acquitted of Financial Crimes in Surprise Legal Victory
In a surprising ruling, Lee Jae-yong, the billionaire boss of Samsung Electronics, has been acquitted by a Seoul court on charges of stock manipulation and accounting fraud linked to a contentious 2015 merger of two Samsung affiliates. The unexpected verdict brings relief to Lee, who has faced legal challenges for years.
The charges against Lee involved allegations of inflating the stock price of Cheil Industries, a textile company, and devaluing Samsung C&T, a construction and engineering firm, ahead of their merger. Prosecutors sought a five-year jail term for Lee, asserting that the merger allowed him to tighten control over Samsung Electronics, the conglomerate’s flagship company where he serves as executive chairman.
However, the Seoul Central District Court found insufficient evidence to support claims that Samsung intended to cause losses to Samsung C&T and its shareholders through the merger. Chief judge Park Jung-jae emphasized that, even with strengthened control by Lee, the merger could not be deemed unfair as long as a reasonable purpose for the consolidation existed.
The unexpected ruling has raised questions about potential appeals from prosecutors and the impact on foreign investors’ confidence in the Korean legal system. Park Sangin, an economics professor at Seoul National University, described the verdict as “totally shocking” and suggested it might undermine faith in the soundness of the Korean capital market.
Lee, also known as Jay Y. Lee, had previously faced legal troubles, being found guilty of bribery and corruption charges in 2017. Although initially sentenced to five years in prison, he was released after less than a year when an appeals court overturned some charges and suspended his sentence. In January 2021, he returned to prison for embezzlement and bribery, but was released on parole in August 2021 and later pardoned.
This legal victory for Samsung comes amid challenges for the tech giant, including a sales slump, losing its top smartphone maker status to Apple, and posting a fourth consecutive quarter of profit decline. During the trial, Lee apologized for the impact of his legal struggles on Samsung and its shareholders, emphasizing the need for pre-emptive responses to an unpredictable future and expressing a commitment to helping Samsung become a top-notch company.
