Samsung Chairman Acquitted in Stock and Accounting Fraud Case
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| Samsung Electronics Chairman Lee Jae-yong arrives at the Seoul Central District Court in Seocho District, southern Seoul, on Feb. 5, 2024, ahead of the hearing where the court delivered its judgement./Nam Gang-ho © Provided by THE CHOSUNILBO |
On February 5, Samsung Electronics Chairman Lee Jae-yong was acquitted of charges related to stock price manipulation and accounting fraud after facing indictment in September 2020. The verdict, issued by the Seoul Central District Court, comes after a three-year-and-five-month legal process.
The court cleared Chairman Lee of the 19 charges, which included violations of the Financial Investment Services And Capital Markets Act. The ruling emphasized the absence of evidence substantiating the criminal charges. Notably, the same not guilty verdict was extended to the other 13 defendants, including Choi Ji-sung, former head of the Samsung Group Future Strategy Office, Kim Jong-jung, former head of the Future Strategy Office Strategy Team, and Jang Chung-ki, former deputy head of the Future Strategy Office.
The accusations against Chairman Lee revolved around allegations of manipulating stock prices to favor the succession of management rights and strengthening group control during the 2015 merger of Cheil Industries and Samsung C&T. Additionally, there were claims of involvement in accounting irregularities related to Samsung Biologics.
Despite the Prosecution Review Committee deciding in June 2020 to cease the investigation and not pursue charges, the Seoul Central District Prosecutors’ Office investigative team formally charged Chairman Lee with 19 offenses during that period.
In the verdict, the court clarified that the merger of Cheil Industries and Samsung C&T was not solely for the purpose of the chairman’s succession of management rights, recognizing broader business objectives. The court further stated that there was no apparent intention to harm shareholders through the merger of the two companies.
The court also affirmed that even if Chairman Lee is proven guilty in the 'Park Geun-hye–Choi Soon-sil Gate,' where he allegedly provided three horses to Choi Soon-sil (formerly known as Choi Seo-won) to garner support for the succession of management rights, this does not inherently imply the illegality of the merger between Cheil Industries and Samsung C&T. The court clarified that the chairman did not exclude or act against the intentions of Samsung C&T in advancing the merger.
Regarding the accusations of accounting irregularities involving Samsung Biologics, the court stated that establishing intentional accounting fraud is challenging, and there is insufficient evidence to reasonably conclude a violation of accounting standards.
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