Samsung Chairman Lee Jae-yong absolved of all legal risks

Samsung Electronics Executive Chairman Lee Jae-yong was acquitted in an appellate trial Monday when the Seoul High Court upheld the first trial's verdict.

Samsung Electronics Executive Chairman Lee Jae-yong in front of Seoul High Court on Monday [YONHAP]

Samsung Electronics Executive Chairman Lee Jae-yong was acquitted in an appellate trial Monday in which the Seoul High Court upheld a lower court verdict.

The ruling is seen to have technically lifted Lee's long-running legal risks that have negatively impacted the business ambitions of Korea's most valuable company.

The Seoul High Court on Monday dismissed the prosecution's appeal in the case against Lee, who was indicted on 19 charges, including unfair trading and stock price manipulation, under the Financial Investment Services and Capital Markets Act regarding the controversial 2015 merger of Cheil Industries and Samsung C&T.

This ruling comes four years and five months after Lee was indicted and a year after he was acquitted in the first trial.

“The court's position is that criminal liability cannot be established based on speculation, scenarios or assumptions,” the appellate court said, adding that “the prosecution’s grounds for appeal lack reasonings.”

The prosecution could appeal to the Supreme Court, but it is unlikely to reverse the preceding rulings, according to industry sources. A third trial in Korea is limited to a legal interpretation review without re-examining the facts.

Lee was indicted in September 2020 on charges of unlawfully intervening in the controversial merger between the two Samsung companies, which was seen as a critical step for Lee to secure management over the family-controlled Samsung Group after his father, former chairman Lee Kun-hee, suffered a heart attack in 2014.

The chairman was acquitted in the first trial in February 2024, followed by an appeal by the prosecution in June seeking a five-year jail term.

It remains to be seen whether the removal of his long-running legal exposure can serve as an impetus for Samsung Electronics, which is in a desperate search for new growth momentum.

It has lost major ground in the realm of AI as it still struggles to supply its high bandwidth memory chip to Nvidia while crosstown rival SK hynix has consistently succeeded.

"We hope that from this ruling, [Chairman Lee] can wholly concentrate on his own duty," Lee's attorney, Kim Yoo-jin, told reporters on Monday.

Whether Lee will return to the company as a registered board member to take greater responsibility, including legal aspects, of management will be at the center of attention.

Lee's registered membership on the board has been repeatedly requested by company shareholders and its compliance committee.

"There must be innovative corporate governance reforms to ensure responsible management, including the reconstruction of the crisis response team, the removal of barriers hindering smooth internal communication, and the reinstatement of the chief executive officer as a registered board member," said Lee Chan-hee, chairman of Samsung's compliance committee, in a report last year.

Under the executive chairman's leadership, Samsung Electronics could see a resurgence of mega deals, as the company has largely stayed dormant in terms of major acquisitions since its $8 billion purchase of Harman in 2017.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]