On Monday, a South Korean court acquitted Lee Jae-yong, Chairman of Samsung Electronics, of financial crimes related to a controversial 2015 merger between Samsung affiliates.
This merger had increased Lee’s control over South Korea’s largest company.
The verdict, issued by the Seoul Central District Court, could alleviate the legal challenges faced by the Samsung heir, coming less than two years after his pardon for a separate conviction in a corruption scandal that played a role in the downfall of a previous South Korean government.
The court ruled that the prosecution failed to convincingly demonstrate that the merger between Samsung C&T and Cheil Industries was unlawfully conducted to enhance Lee’s influence over Samsung Electronics.
Prosecutors had sought a five-year jail term for Lee, accusing him of stock price manipulation and accounting fraud.
The court’s decision raised questions about the possibility of an appeal by the prosecutors. Throughout the case, Lee consistently asserted his innocence, characterizing the 2015 merger as a routine business activity.
Samsung Heir’s Conviction: Lee Jae-yong’s Legal Turmoil
After being convicted of 2015 deal-related bribery, Lee Jae-yong served 18 months in prison in 2017.
His five-year sentence was for bribing then-President Park Geun-hye and her close confidant with 8.6 billion won ($6.4 million) to secure government support for the 2015 merger.
He needed this merger to strengthen his control over Samsung and the father-son leadership succession.
The scandal convicted Park and her confidant, sparking protests in South Korea. Park was removed from office after citizens complained about business-politics corruption.
Lee’s parole in 2021 and pardon by South Korean President Yoon Suk Yeol in August 2022 showed leniency toward major white-collar crimes and favoritism toward convicted business leaders.
The 2015 merger was opposed by some shareholders because it favored the Lee family over minority shareholders.
Court: Lack of Proof in 2015 Samsung Merger Case
In its ruling on Monday, the court declared that the evidence presented by the prosecution was insufficient to establish that the 2015 merger was conducted through illicit means or solely intended to reinforce Lee’s control over Samsung Electronics.
The court suggested that broader business considerations were likely at play.
Furthermore, it stated that it remained unclear whether the terms of the deal unfairly disadvantaged shareholders, and prosecutors failed to substantiate allegations of accounting fraud by Samsung officials.
Notably, South Korean corporate leaders often face relatively lenient penalties for charges related to corruption, business irregularities, and other offenses, with judges frequently citing concerns for the country’s economic well-being.
Lee Jae-yong has been confronting a challenging period as the leader of one of the world’s prominent manufacturers of computer chips and smartphones.
Geopolitical unrest, including Russia’s war on Ukraine, has adversely impacted the global economy and contributed to a decline in technology spending.
