A South Korean court on Monday acquitted Samsung Chief Executive Officer Lee Jae-yong of charges of stock price manipulation and accounting fraud, the latest twist in the billionaire’s legal troubles linked to a merger that helped him secure control. of the largest company in the country.
A Seoul District Court judge said there was insufficient evidence to prove prosecutors’ charges against Lee and 13 other current and former Samsung officials, including the allegation that the merger’s primary intention was to strengthen Lee’s power. on the conglomerate, against the commercial interests of each Samsung subsidiary that merged.
Prosecutors had sought a five-year prison sentence and a 500 million won fine against the 55-year-old Lee. He has denied any wrongdoing. Prosecutors have the option of appealing the decision to a higher court. Neither Samsung Electronics nor the prosecution commented immediately after the verdict.
Lee’s lawyers said in a statement that the decision “clearly confirms the legality” of the merger and the accounting of its subsidiaries.
Samsung is the largest and most successful of the South Korean conglomerates known as chaebol. The group’s electronics arm, Samsung Electronics, alone accounts for around a sixth of the country’s exports. Lee, also known as Jay Y. Lee, is the richest person in South Korea according to Bloomberg News, which estimated his net worth at around $9 billion.
Some South Koreans speak with pride of the chaebol for helping transform the country from a war-torn agrarian economy to a global export powerhouse. But others have increasingly examined whether they crack down on smaller companies or make corrupt deals with government officials without facing enough repercussions.
Most chaebol scandals have arisen from attempts by families to ensure that the next generation inherits control, such as arranging for scions to buy shares in subsidiaries at discounted prices.
Business experts in South Korea said they were surprised by Monday’s verdict, which they said raised concerns about the fairness of the country’s markets and the credibility of its judiciary.
“This case confirms a judicial system that is more backward than in the past,” said Sung-In Jun, an economics professor at Hongik University in Seoul, “and how powerless South Korea’s political and judicial authorities are in the face of the situation”. chaebol.”
Lee’s legal troubles began when mass protests in Seoul led to the 2016 ouster of former President Park Geun-hye, accused of collecting or seeking bribes from Samsung and other chaebol and abusing her power. Ms. Park was imprisoned in 2017 and pardoned and released in 2022.
Lee was arrested in 2017 on charges of bribing Park and her confidant, Choi Soon-sil, to gain government support for a 2015 merger of two Samsung subsidiaries at the center of the corruption scandal. At that time he was vice president of Samsung Electronics.
Prosecutors had said the merger was a step in Lee’s effort to transfer control of Samsung from his father, Lee Kun-hee, who was incapacitated by a heart attack in 2014 and had been twice convicted and pardoned of bribery and tax evasion. before. Elliott Management, a New York-based hedge fund, launched a campaign urging shareholders to vote against the merger. But the country’s National Pension Service, which was a major shareholder in one of the subsidiaries, voted in favor of the merger in exchange for bribes from Lee, prosecutors said.
In 2017, a Seoul district court sentenced Mr. Lee to five years in prison for offering 8.9 billion won in bribes to Ms. Park and Ms. Choi.
His case wound its way through the court system over the next two years, and the Seoul High Court reduced his sentence and released him from prison in 2018. The nation’s Supreme Court ordered a retrial in 2019.
While awaiting retrial in 2020, Lee was charged with stock price manipulation and accounting fraud., the case whose verdict was announced on Monday. But prosecutors were unable to arrest him because a court refused to issue an arrest warrant.
Prosecutors had accused Lee and other current and former Samsung officials of committing those crimes in the 2015 merger. Their lawyers said the merger had been carried out in accordance with the law.
During the retrial on bribery charges in 2021, the Seoul High Court sentenced Mr. Lee to two and a half years in prison and found that the bribes had amounted to 8.6 billion won.
Later that year, the Ministry of Justice paroled him, along with 800 other prisoners, on a holiday commemorating the end of Japanese colonial rule over Korea at the end of World War II. South Korea often grants parole or pardons to prisoners on important national holidays.
Business analysts were divided over whether Lee’s time in prison had an impact on his empire. Samsung Electronics became the most profitable technology company in the world while he was in prison. Others said Samsung was postponing key decisions with Lee in jail and fell behind competitors such as TSMC.
At the time of his release in 2021, he was still banned from working at Samsung for five years. That was lifted in 2022 when he obtained a pardon from President Yoon Suk Yeol, who as a prosecutor had led the investigation of Mr. Lee.
Two months later, Samsung Electronics named Lee CEO, promoting him less than 15 months after he was released from prison for bribery.