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S. Korean court acquits Samsung chief over 2015 merger case: Yonhap

A South Korean court acquitted Samsung Electronics chief Lee Jae-yong of a raft of crimes linked to a controversial 2015 merger.

Critics argue that the 2015 takeover deliberately undervalued the construction firm's stock price
Critics argue that the 2015 takeover deliberately undervalued the construction firm's stock price - Copyright AFP Jung Yeon-je
Critics argue that the 2015 takeover deliberately undervalued the construction firm's stock price - Copyright AFP Jung Yeon-je

A South Korean court on Monday acquitted Samsung Electronics chief Lee Jae-yong of a raft of crimes linked to a controversial 2015 merger, the Yonhap news agency reported.

Yonhap reported that the court said that they did “not recognise intention to harm shareholders”, through the merger, which critics had claimed was bad value and done mostly to ensure a smooth third-generational power transfer to Lee, a scion of Samsung’s founding family.

“Solidifying Lee’s control and ensuring his succession wasn’t the only purpose of the merger,” the court ruled, according to the Yonhap report, adding that there were “no validations to prove prosecution’s charge”.

The verdict from the Seoul Central District Court clears Lee of several charges including stock price rigging, breach of trust and accounting fraud in the 2015 merger between Samsung C&T and Cheil Industries.

Critics argue that the 2015 takeover deliberately undervalued the construction firm’s stock price, unfairly affecting its shareholders.

Lee, who has already served jail time over a high-level fraud and embezzlement case, is the current executive chairman of Samsung Electronics, the crown jewel of the sprawling Samsung group.

In the deal, three C&T shares were offered for one Cheil share, a transaction prosecutors claimed had “undermined the fundamentals of the market”, according to an earlier Yonhap report.

In the merger process “multiple illegal acts were mobilised… for the smooth succession of the group chief”, the prosecution said in its closing argument in November, demanding a five-year sentence.

“A structure in which company’s owner groups are allowed to pursue personal interest is the biggest cause of the worsening Korea discount,” the prosecution said, referring to the perceived global undervaluing of South Korean businesses.

“We feel utterly distressed it was done by Samsung, the country’s number-one company.”

– No ‘personal interest’ –

Lee said in court that he had not been driven by “personal interest in the merger”.

“I swear I had never imagined increasing my stake at the expense of causing damage to other shareholders,” he was reported by Yonhap as saying in his closing argument.

The verdict comes almost three years after the first court hearing in the case, with more than 100 hearings being held since.

Lee spent 18 months in jail after a fraud and embezzlement conviction that followed a sweeping investigation that also brought down former president Park Geun-hye in 2017.

Lee was released on parole in August 2021, having served half his sentence.

He returned to management shortly after release and was officially named executive chairman of Samsung Electronics in October 2022, two months after South Korea’s president pardoned him for the embezzlement and corruption convictions.

AFP
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With 2,400 staff representing 100 different nationalities, AFP covers the world as a leading global news agency. AFP provides fast, comprehensive and verified coverage of the issues affecting our daily lives.

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