Samsung Electronics Chairperson Lee Jae-yong leaves the Seoul Central District Court on Feb. 5 after being acquitted of stock manipulation in a case related to the merger of two Samsung affiliates. (Kim Yeong-won/The Hankyoreh)
Samsung Electronics’ Lee Jae-yong was acquitted on Monday of charges related to the illegal succession of management rights over the South Korean conglomerate.
The acquittal comes nearly three and a half years after prosecutors indicted Lee and others in September 2020 on charges of unfair trading practices, stock manipulation, and breach of trust in violation of the Capital Markets Act.
The chaebol scion’s legal troubles can be traced back even further, considering that Lee was convicted of providing bribes — including a horse — to secure management rights over Samsung during the influence-peddling trial that ultimately landed former South Korean President Park Geun-hye in prison. That makes for a court marathon that has been ongoing for a month shy of nine years.
Lee has been embroiled in two cases that have gone to court, the first concerning his offering of bribes in the Park Geun-hye influence-peddling scandal, and this most recent one concerning the foul play in the merger of Samsung C&T and Cheil Industries and accounting fraud at Samsung Biologics in order to secure his spot as Samsung’s successor.
When it comes to the influence-peddling trial, the judiciary ruled in January 2021 that Lee had given out bribes so that he could take his place atop the Samsung Group.
Lee was repeatedly detained and released during the three rounds of trials of the influence-peddling case. While he was detained after being sentenced to five years in prison in the first trial on Feb. 1, 2017, he was released on appeal and given a two-and-a-half-year sentence, suspended for four years, one year later. In January 2021, he was once again placed in jail, having been handed a sentence of two and a half years by a higher court.
With this, Lee earned the dishonor of being the first chairperson of Samsung to be jailed, as well as being the first to have been sent behind bars twice.
This case was mostly adjudicated during the period in which Yoon Suk-yeol was prosecutor general and Han Dong-hoon was a senior prosecutor. Yoon now serves as Korea’s president, and Han as the interim leader of the ruling party.
Seven months after going back in the slammer, Lee was paroled in August 2021. The Ministry of Justice said it made the decision to parole Lee based on consideration that he had completed 60 percent of his sentence (including the time he spent during his first period of detention) and took the global economic situation into account.
One year later, Lee was given a special presidential pardon on the occasion of South Korea’s Liberation Day on Aug. 15. This pardon wiped his slate clean, lifting the five-year restriction on work levied on him in accordance with the Act on the Aggravated Punishment of Specific Economic Crime, freeing him from any obstacles preventing him from engaging in the management of the Samsung empire.
Monday’s ruling dealt with the merger and alleged accounting fraud.
While the case itself is quite complex, in simple terms it concerns suspicions that books were being cooked at Samsung Biologics during an unlawful merger of Samsung C&T and Cheil Industries.
The prosecution is claiming that various high-ranking officials, including those from Samsung’s Future Strategy Office, systemically engaged in unfair trading practices, market price manipulation, stock price rigging, false disclosure, accounting fraud and perjury.
Since the case went to trial three years and five months ago, 106 hearings have been held. Lee Bok-hyun, who currently serves as the head of the Financial Supervisory Service, led the investigation during his tenure as head of the economic crimes division at the Seoul Central District Prosecutor’s Office at the time.
The investigation began in earnest in December 2018 when prosecutors raided Samsung Biologics and the former Future Strategy Office (now the Business Support Task Force). Five years later, in November 2023, prosecutors requested that Lee be sentenced to five years in prison and fined 500 million won, given that he was the final decision-maker in the case and benefited substantially from any below-the-board behavior.
In February 2024, the court acquitted not only Lee, but also the other executives who were brought to trial with him.
The court argued that it was difficult to verify that the main purpose of the merger of Samsung C&T and Cheil Industries was to solidify Lee’s control over the Samsung conglomerate and take over as successor.
In regard to the accounting fraud case at Samsung Biologics, the court ruled that it “cannot be concluded that the defendants intentionally engaged in accounting fraud.”
However, the case is expected to go on for some time longer, as the first trial will be followed by an appeal and likely end up in the Supreme Court.
By Ock Kee-won, staff reporter
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