Samsung Electronics Chairman Jay Y. Lee was acquitted of accounting fraud and stock manipulation charges related to a 2015 merger designed to solidify his control over the conglomerate.
The surprising ruling, deviating from expectations of a suspended sentence, may grant Lee more influence over South Korea’s largest conglomerate, Samsung.
Legal challenges had stifled innovation at Samsung, making it bureaucratic and risk-averse. Lee, along with former executives, was accused of manipulating the merger between Samsung C&T and Cheil Industries, allegedly sidelining minority shareholders.
The court asserted the merger decision was made by the companies’ boards, rejecting claims of strengthening Lee’s management rights. All 14 defendants, including Lee, were acquitted. This verdict marks a legal victory for Lee, who previously served time for bribery and was pardoned in 2022 to aid the nation’s economic challenges.
If unchallenged, the ruling clears Lee’s legal hurdles, dating back to 2016. Lee’s lawyer praised the “wise decision,” while opposition figures criticized the perceived unfairness in succession. In a related case, The Hague’s Permanent Court of Arbitration ordered South Korea to compensate hedge fund Elliott for the National Pension Service’s role in approving the merger.
The ruling reflects the lingering influence of family-controlled conglomerates in South Korea’s economic landscape, with the Lee family still owning over 20% of Samsung Electronics. Samsung C&T shares rose prior to the ruling, reflecting the potential impact on the conglomerate’s future direction.