Samsung chief cleared of fraud charges in 2015 merger case
What's the story
Jay Y. Lee, chairman of Samsung Electronics, has been cleared by a Seoul appeal court in a stock manipulation and accounting fraud case.
The charges were linked to a controversial 2015 merger that prosecutors said was designed to cement his control of the company.
The verdict clears any legal hurdles to Lee's leadership at Samsung after previous legal troubles, including an 18-month sentence for bribery, which was later pardoned by President Yoon Suk Yeol.
Legal battle
Prosecutors sought prison sentence for Lee
The prosecutors had appealed to the Seoul High Court, seeking a five-year prison sentence for Lee.
They had based their appeal on an August ruling that found Samsung BioLogics, an affiliate of Cheil Industries, guilty of breaching accounting standards by inflating its assets to justify the merger.
The case revolved around an $8 billion merger between Samsung C&T and Cheil Industries, with allegations of stock price manipulation and accounting fraud against Lee.
Past controversies
Leadership marred by legal issues
The 2015 merger had sparked backlash from investors such as US hedge fund Elliott, raising concerns over the corporate governance of South Korea's family-owned conglomerates.
In 2023, the South Korean government was ordered to pay $108.5 million to Elliott over the pension fund's role in approving this merger.
Last year, the National Pension Service had sued Lee for damages, claiming the merger undervalued Samsung C&T.
Defense stance
Lee denies any wrongdoing in court
In court last November, Lee denied any wrongdoing, saying, "I never intended to deceive or damage investors for personal gain."
The lower court held that the prosecution had not presented enough evidence to prove that Lee's succession was the primary reason for the merger.
It said there was a "rational business purpose" and even claimed the merger "benefited Samsung C&T shareholders by strengthening Lee's control of the group and stabilizing management."