Samsung chief Lee Jae-yong acquitted in 2015 merger case

Seoul
CNN
 — 

The billionaire boss of Samsung Electronics, one of the world’s biggest technology firms, will not serve more jail time.

Lee Jae-yong was found not guilty by a Seoul court on Monday on charges of stock manipulation and accounting fraud connected to a controversial merger in 2015 of two Samsung affiliates.

The acquittal comes as a big relief to Lee, who has been embroiled in legal problems for years.

Last year, South Korean prosecutors had asked for a five-year jail term for Lee, alleging that he and other executives inflated the stock price of a textile company, Cheil Industries, and devalued a construction and engineering company, Samsung C&T, ahead of the merger.

They alleged that the merger of the two firms allowed Lee to gain a tighter grip on Samsung Electronics, the group’s flagship company, of which he serves as executive chairman.

Lee’s attorneys had denied any wrongdoing, saying the merger had helped the management of the conglomerate became more stable.

Seoul Central District Court chief judge Park Jung-jae said there was not enough evidence that Samsung had intended to cause losses to Samsung C&T and its shareholders through the merger.

“Even if Lee’s control has been strengthened, the merger in this case cannot be considered unfair, as long as there is a reasonable purpose for the merger,” Park said.

It’s unclear if prosecutors will appeal this ruling, which has come as a surprise to experts.

“It is a totally shocking verdict,” Park Sangin, economics professor at Seoul National University, told CNN. He added the decision will “lead to lowering the confidence of foreign investors in the Korean legal system and the soundness of the Korean capital market.”

Lee, who is also known as Jay Y. Lee, was previously found guilty of bribery and other corruption charges in 2017 in a separate case. He was sentenced to five years in prison, but walked free after less than a year when an appeals court threw out some of the charges and suspended his sentence.

However, the billionaire was sent back to prison in January 2021 after being sentenced to two and a half years without a suspension after the Seoul High Court found him guilty of embezzlement and bribery. He was released on parole in August 2021 and pardoned a year later.

The relief for Samsung comes at a time when it is battling a sales slump. The South Korean tech giant recently lost its crown as the world’s top smartphone maker to Apple (AAPL), and has also posted its fourth straight quarter of profit decline, in a sign of how demand for consumer devices and the chips that power them continue to remain sluggish.

During his trial last year, Lee had apologized for the troubles suffered by Samsung and its shareholders as a result of his legal struggles.

“The world is experiencing geopolitical risks, and our country is in the middle of them. Technological innovation is occurring in this world at a faster rate than we can imagine,” Lee had said to the judges.

“I believe that it is necessary to respond pre-emptively to an unpredictable future, and the merger of the two companies was promoted in that regard.”

“In the future, I would like to ask for the opportunity to help Samsung become a truly top-notch company and to focus all my capabilities on moving forward,” he had said.