Samsung chairman acquitted of financial crimes for lack of evidence

Samsung Electronics Chairman Lee Jae-yong leaves the courtroom after being acquitted during the first sentencing hearing of the \'Illegal Succession to Control of Samsung Group\' case at the Seoul Central District Court in Seocho-gu, Seoul, South Korea, on Friday. All of Samsung\'s former and current executives who went on trial with him were also acquitted. Sung Dong-hoon

Samsung Electronics Chairman Lee Jae-yong, who went on trial in the case of Samsung Group's illegal succession of management rights, was acquitted in the first trial on February 5. The first trial ruling came three years and five months after the prosecution indicted Lee.

The Seoul Central District Court acquitted Lee of all 19 charges at the sentencing hearing of the illegal succession of Samsung's management rights. All of Samsung's former and current executives who were also on trial were also acquitted. Prosecutors demanded a five-year prison term and a fine of 500 million won.

Lee is accused of committing various illegal acts in 2015 when he pushed for the merger of Samsung C&T and Cheil Industries to succeed Samsung Group's management rights at a minimum cost. At that time, Lee was able to control Samsung Electronics, the core of Samsung Group, only through cross-shareholding. He would have had to pay a hefty inheritance tax to acquire the Samsung stake from his father, the late former chairman Lee Kun-hee. The prosecution judged that incumbent chairman Lee merged Samsung C&T and Cheil Industries to solve the problem. Samsung C&T owned about 4 percent stake in Samsung Electronics, and Lee was the largest shareholder of Cheil Industries.

Prosecutors believed Lee and others raised Cheil Industries' stock price and lowered Samsung C&T's stock price, creating a favorable situation for the merger. In doing so, they committed various illegal acts, including spreading false information, buying out major shareholders, and illegally lobbying the National Pension.

He is also accused of inflating the book value of the subsidiary Samsung BioLogics by more than 4 trillion won through fraudulent accounting, fearing that Cheil Industries' stock price would fall before and after the merger.

The court said, "All the charges in this case are innocent because there is no proof of crime. It cannot be concluded that the sole purpose of the merger was to strengthen the management power of the defendant Lee Jae-yong and succeed to the Samsung Group, nor can it be said that Lee Jae-yong and Samsung's Future Strategy Office made the decision to merge unilaterally.”

It added, "There is also insufficient evidence to show that the merger ratio or timing was unfair to Samsung C&T and its shareholders, and it is difficult to conclude that there was any concealment or manipulation in the merger decision."

The court also rejected the prosecution's argument that Samsung Bio had to disclose the possession of the call option of the joint venture Biogen according to accounting standards, adding, “It cannot be concluded that the defendants were intentional in fraudulent accounting."

Chairman Lee's lawyer told reporters shortly after the sentence, "I think this ruling clearly confirmed that the merger of Samsung C&T and Samsung BioLogics are legal," adding, "I sincerely thank the court for making a wise judgment."

In a statement issued shortly after the ruling, the People's Solidarity for Participatory Democracy criticized, "This is a result contrary to the Supreme Court's ruling on state affairs, which admitted that the illegal merger between Samsung C&T and Cheil Industries was related to succession,” adding, "The ruling will go down in history as the epitome of chaebol impunity by setting a strange precedent that they can merge group companies arbitrarily to take over control.”

※This article has undergone review by a professional translator after being translated by an AI translation tool.