Samsung's CEO Lee Acquitted in 2015 Merger Case Allegations

Samsung Electronics Chairman Jay Y. Lee was found not guilty by a Seoul court on Monday in a case related to irregularities in a 2015 merger of Samsung affiliates that prosecutors said was designed to cement his control of the tech group.

Lee, 55, and other former executives were accused of engineering a merger between two Samsung affiliates - Samsung C&T and Cheil Industries - in a way that rode roughshod over the interests of minority shareholders.

Prior to the merger, the Lee family and related entities controlled Cheil but not Samsung C&T, which was a major shareholder in Samsung Electronics - the crown jewel in the Samsung conglomerate.

Prosecutors had sought a five-year jail term. Lee denied wrongdoing, arguing that he and other executives acted on the belief the merger would benefit shareholders.

The panel of three judges at the Seoul Central District Court said that the merger decision was reached by the boards of the two companies after their consideration and review.

"It cannot be concluded that the sole purpose was to strengthen management rights of defendant Lee Jae-yong and ease his succession within the Samsung Group," Judge Park Jeong-je told a packed courtroom, using Lee's Korean name.

All 14 defendants were acquitted.

The sentence prevents a return to jail for Lee who was convicted in 2017 of bribing a friend of former President Park Geun-hye. He served 18 months of a 30-month sentence and was pardoned in 2022 by current President Yoon Suk-yeol with the government saying he was needed to help overcome a "national economic crisis."

If prosecutors decide not to appeal the ruling, it would clear up Lee's legal troubles which date back to 2016.

Lee's lawyer, Kim You-jin, thanked the court for "a wise decision."

Park Yong-jin, a lawmaker for the main opposition Democratic Party, decried the ruling in a Facebook post saying Lee's succession was unfair and that heads of conglomerates should not be protected in the interest of a fair market economy.

South Korea's biggest conglomerates are still owned and controlled by their founding families and the public has long veered between anger over their many scandals and recognition that the families are responsible for much of the country's economic success.

As of end-September, the Lee family and related entities owned 20.7 percent of Samsung Electronics.

(With input from Reuters)

(Cover: Samsung Electronics Chairman Jay Y. Lee leaves the Seoul Central District Court after attending the final verdict in Seoul, South Korea, February 5, 2024. /CFP)