Samsung Electronics Chairman Lee Jae-yong was acquitted on Feb. 5 on charges of stock price manipulation and accounting fraud. He was indicted in September 2020, and this verdict comes after three years and five months.
The Seoul Central District Court acquitted Chairman Lee, who faced 19 charges including violation of the Financial Investment Services And Capital Markets Act, stating that “there is no evidence substantiating the criminal charges in this case.” The same verdict of not guilty was also given to the remaining 13 defendants, including Choi Ji-sung, former head of the Samsung Group Future Strategy Office, Kim Jong-jung, former head of the Future Strategy Office Strategy Team, and Jang Chung-ki, former deputy head of the Future Strategy Office.
Chairman Lee is accused of manipulating stock prices in favor of the succession of management rights and strengthening group control during the 2015 merger of Cheil Industries and Samsung C&T. There are also allegations of involvement in accounting irregularities related to Samsung Biologics in the process.
In June 2020, the Prosecution Review Committee decided to cease the investigation and not pursue charges. However, during that time, the Seoul Central District Prosecutors’ Office investigative team formally charged the chairman with 19 offenses.
The court, in its verdict, stated that “the merger of Cheil Industries and Samsung C&T was not solely for the purpose of the chairman’s succession of management rights, and business objectives are also recognized.” It further noted, “There does not appear to be any intention to cause harm to the shareholders through the merger of the two companies.”
The court also concluded that even if the chairman is found guilty in the so-called ‘Park Geun-hye–Choi Soon-sil Gate,’ where he allegedly provided three horses to Choi Soon-sil (formerly known as Choi Seo-won) for support in the succession of management rights, it does not necessarily indicate the illegality of the merger between Cheil Industries and Samsung C&T. The court determined that the chairman did not exclude or act against the intentions of Samsung C&T in promoting the merger.
Regarding the allegations of accounting irregularities against Samsung Biologics, the court noted that “it is difficult to establish intentional accounting fraud, and there is insufficient evidence to reasonably conclude a violation of accounting standards.”
