Samsung Electronics Chairman Lee Jae-yong was acquitted by an appellate court on Monday, clearing him of all charges related to a contentious merger between Samsung affiliates in 2015.
The decision, arriving about a year after the initial verdict, found Lee not guilty, lifted a weight off the Samsung chief, allowing him to focus on steering the tech giant to tackle various challenges.
The judges at the Seoul High Court upheld the lower court’s verdict dismissing all charges against Lee, including stock manipulation, breach of trust, accounting fraud and other irregularities in connection with the high-profile 2015 merger of Cheil Industries and Samsung C&T.
The judges said the evidence presented by the prosecutors was not sufficient to prove the charges beyond a reasonable doubt.
Thirteen other key Samsung officials, including Choi Gee-sung and Jang Choong-ki, former executives of the group’s now-disbanded control tower, the Future Strategy Office, were acquitted as well.
In 2020, Lee and Samsung executives were indicted for orchestrating wrongdoings in regards to the 2015 merger, which prosecutors argued was intended for Lee to cement his grip on South Korea’s largest conglomerate at a lower cost.
Prosecutors alleged that Lee manipulated stock prices by inflating Cheil Industry’s values while depreciating Samsung C&T to create a favorable merger ratio.
As part of the merger, three shares of Samsung C&T were exchanged for one share of Cheil Industries. At the time, Lee, then Samsung Electronics vice chair, held a 23.2 percent stake in Cheil but had no direct ownership in Samsung C&T. The deal made him the largest shareholder of the merged Samsung C&T, the de facto holding company of Samsung Group, solidifying his succession of the family-controlled group from his father, Lee Kun-hee.
In response, the court said the prosecution failed to provide admissible evidence on its claims regarding fraudulent transactions, stock-price manipulation and breach of trust in the merger process.
Prosecutors also contended that Lee was involved in fraudulent accounting practices at Samsung Biologics, a Cheil subsidiary, by more than 4 trillion won ($2.72 billion), to boost Cheil’s worth ahead of the merger. The prosecutors have submitted new evidence during the appellate trial, in reflection of a separate verdict by the Seoul administrative Court in August that ruled Samsung Biologics altered accounting standards.
The court however dismissed the prosecution’s argument, saying there was no evidence to conclude that the accounting fraud was intentional.
Lee did not make any comments as he left the court on Monday, but his lawyers told reporters they “sincerely thank the court for its wise decision.”
“We hope that with this ruling, defendants will now be able to focus on their duties,” Lee’s attorneys said, adding that it was a lengthy investigation and trial process.
Although prosecutors could file an appeal to the Supreme Court, legal analysts consider it unlikely to reverse the verdict.
Monday’s ruling resolved some uncertainties for Lee, who has been entangled in legal troubles for years.
In a separate conviction tied to the same merger, Lee served 18 months in prison from 2017 for bribing former President Park Geun-hye and her close confidante to gain government support for the deal. He was later released on parole in 2021 and pardoned by President Yoon Suk Yeol in 2022.
Lee was released on parole in 2021, and pardoned by South Korean President Yoon Suk Yeol in August 2022.
With the legal uncertainties behind him, Lee is expected to shift his focus to addressing Samsung’s disappointing earnings and efforts to catch up with rivals in the pivotal AI chip sector.
Last year, Samsung's chip business posted an annual operating profit of 15.1 trillion won, lagging behind its smaller crosstown rival SK hynix's 23. 47 trillion won.
