Samsung chairman Lee Jae-yong found not guilty in merger case

Lee Jae-yong has been acquitted of all financial fraud charges

Earlier today, a court in Seoul acquitted Lee Jae-yong of the charges against him. He was found not guilty of accounting fraud, breach of trust, and stock price rigging in the merger of Cheil Industries Inc. and Samsung C&T Corp. that happened in 2015. It was alleged that he took some illegal steps that helped Samsung Group in merging Cheil Industries Inc. and Samsung C&T Corp. at a lower cost. Three Samsung C&T shares were offered for one Cheil Industries share, which resulted in a loss for Samsung C&T shareholders.

The prosecutors alleged that Samsung Group manipulated the stock market in a way that Cheil Industries shares were overvalued and Samsung C&T shares were undervalued. Samsung Group and its executives were allegedly involved in mass purchasing stocks of its affiliate companies and illegally lobbying the country's National Pension Service to support the merger of the two companies. National Pension Service is a major shareholder in Samsung C&T.

This merger was crucial for the succession of Lee Jae-yong, and he was able to take control of Samsung Electronics after his father, Lee Kun-hee, suffered a major heart attack. Lee Kun-hee died in 2020 after years in hospital. Samsung C&T is the de facto holding company of Samsung Group, and Lee Jae-yong is the biggest shareholder in the company with 23.2% shares. Lee denied all these charges and pleaded to be acquitted so that he could “concentrate all resources on moving the company forward.” Lee already spent 18 months in jail in 2021.

The prosecution demanded five years of jail sentence for Lee and a fine of KRW 500 million (~$375,000). The court declared that there were no irregularities in Lee's succession of the group, and Lee's succession of the group was not the sole reason for the merger of Cheil Industries Inc. and Samsung C&T Corp. The court also found no evidence of financial loss to Samsung C&T shareholders. Lee was also acquired of financial accounting fraud at Samsung Biologics, a Cheil Industries subsidiary. Three former Samsung officials and ten others were also acquitted of charges related to the merger.