Lee Jae-yong, Normal Work After Morning Arrival... Afternoon Verdict on 'Unfair Merger and Accounting Fraud'

Sentencing Hearing at 2 PM Today at Seoul Central District Court
Key Issue: Whether 'Management's Judgment' is Recognized
Final Argument: "Please Give Us the Opportunity to Focus Our Capabilities Moving Forward"

Samsung Electronics Chairman Lee Jae-yong reportedly went to the Seocho building, where his office is located, on the morning of the 5th, the day the first trial verdict for the 'unfair merger and accounting fraud' case was delivered, and was focusing on his work as usual.

Samsung Electronics Chairman Lee Jae-yong is attending the first trial sentencing hearing related to accounting fraud and unfair merger held at the Seoul Central District Court in Seocho-gu, Seoul on the 5th. Photo by Kang Jin-hyung aymsdream@

According to the business community, Chairman Lee handled group affairs as usual in the morning and planned to attend the sentencing trial held at 2 p.m. at the Seoul Central District Court Criminal Division 25-2 (Presiding Judge Park Jeong-je, Judges Ji Gwi-yeon and Park Jeong-gil). Samsung Electronics employees were also reported to have been working in a tense state since the morning. In the afternoon trial, verdicts are expected to be delivered not only for Chairman Lee but also for 13 defendants including former Samsung Electronics Future Strategy Office chief Choi Ji-sung and former Future Strategy Office deputy head Jang Chung-gi, so Samsung Electronics is expected to focus all its attention on the court throughout the day.

In particular, this case is regarded as the last hurdle of 'judicial risk' for Chairman Lee. It is the last case in which he is involved and on trial. With Samsung Electronics having improved its semiconductor deficit in the second half of last year and the semiconductor market expected to turn prosperous this year, the verdict delivered on this day could have a significant impact on Chairman Lee’s activities this year, drawing attention from the business community. If Chairman Lee is acquitted, he can temporarily shake off the burden of judicial risk and focus more on management activities. However, regardless of the verdict in the first trial, it is highly likely that either the prosecution or Chairman Lee’s side will appeal, leading to a second trial and eventually a Supreme Court appeal, meaning the burden of the trial will likely continue for some time. On the other hand, if acquitted in the first trial, Chairman Lee could gain a favorable position ahead of the second trial and Supreme Court appeal.

The verdict is expected to depend on whether the merger of Samsung C&T and Cheil Industries and the accounting fraud at Cheil Industries’ subsidiary Samsung BioLogics can be seen as a 'reasonable judgment' by management. Chairman Lee was indicted in September 2020 on charges of illegally intervening in the merger process of Samsung C&T and Cheil Industries to strengthen group control and ensure stable succession of management rights. He was also indicted on charges of accounting fraud related to the accounting irregularities at Samsung BioLogics, a subsidiary of Cheil Industries, and the two cases were consolidated.

At the final argument on November 17 last year, Chairman Lee pleaded, "I never had personal gain in mind during the merger process of Samsung C&T and Cheil Industries." He said, "I believed the merger would benefit both companies. I also thought it responded to the broader social demand to make the governance structure more transparent and simple." He added, "I sincerely ask for the opportunity to focus all my efforts solely on moving forward." On the other hand, the prosecution argued, "This case undermined the foundation of the capital market for the succession of the group’s head," and requested a sentence of five years in prison and a fine of 500 million won for Chairman Lee.

This content was produced with the assistance of AI translation services.