Jay Y. Lee Cleared of Charges in Samsung Merger Case

Samsung Chairman Lee Jay Y. Acquitted in Accounting Fraud Case

On Monday, a Seoul appeals court confirmed the acquittal of Jay Y. Lee, Executive Chairman of Samsung Electronics, regarding allegations of accounting fraud and stock manipulation.

Details of the Case

The case centers around the 2015 merger of two Samsung affiliates, Cheil Industries and Samsung C&T. Lee faced 19 charges related to unfair trading practices and manipulation of stock prices, as defined by the Financial Investment Services and Capital Markets Act.

Prosecutors argued that the merger was strategically designed to consolidate Lee’s control over South Korea’s largest electronics company.

Furthermore, the prosecution contended that the merger negatively impacted the shareholders of Samsung C&T.

Court Ruling and Timeline

This ruling follows a lower court’s acquittal of Lee a year prior. The initial indictment occurred in September 2020, marking nearly four years and five months of legal proceedings.

The court determined it was difficult to assert the merger occurred without the agreement of all parties involved.

Specifically, the court noted the merger was the result of arrangement and cooperation between Samsung C&T, Cheil Industries, and Samsung’s Future Strategy Office.

Indictment and Defense

In September 2020, Lee, then Vice Chair of Samsung Electronics, was indicted alongside other former Samsung executives.

The charges stemmed from advocating for the merger of Cheil Industries, Samsung’s textile division, with Samsung C&T, its construction arm, in 2015.

The aim, according to the prosecution, was to secure control of the tech giant’s management.

During a November 2023 hearing, Lee refuted the allegations, asserting that the merger process adhered to the company’s established operational protocols.

Prosecution's Request and Outcome

Prosecutors had requested a five-year prison sentence and a fine of 500 million KRW (approximately $375,000) for Lee during the appeals court proceedings.

However, the appeals court upheld the initial acquittal, extending a decade-long series of legal challenges for Lee.

Future Actions

According to Yonhap, the prosecution intends to review the high court’s decision before determining whether to appeal to the Supreme Court.

The initial legal disputes began in 2015, focusing on the governance issues highlighted by the merger.

All former Samsung executives involved were also found not guilty by the Seoul appeals court on Monday.