'14 People Including Lee Jae-yong Acquitted in 1st Trial on Allegations of Unfair Merger... Court: "No Evidence"'

The court ruled that there were no illegal acts in the merger process between Samsung C&T and Cheil Industries in September 2015, acquitting Samsung Electronics Chairman Lee Jae-yong and the top executives of Samsung's Future Strategy Office who were tried together. This verdict comes about three years and five months after the prosecution's indictment.

The Seoul Central District Court Criminal Division 25-2 (Presiding Judges Park Jeong-je, Ji Gui-yeon, Park Jeong-gil) acquitted Chairman Lee, who was charged with unfair trading practices and market manipulation under the Capital Markets Act, as well as breach of trust. Thirteen others who were tried alongside Chairman Lee, including former Samsung Group Future Strategy Office head (Vice Chairman) Choi Ji-sung, former Future Strategy Office deputy head (President) Jang Choong-ki, former Future Strategy Office Strategy Team 1 head (President) Kim Jong-jung, and former Samsung C&T presidents Choi Chi-hoon, Kim Shin, and Lee Young-ho, were also acquitted.

Samsung Electronics Chairman Lee Jae-yong is leaving the courtroom after being acquitted in the first trial related to accounting fraud and unfair mergers at the Seoul Central District Court in Seocho-gu, Seoul on the 5th. Photo by Kang Jin-hyung aymsdream@

The prosecution argued that the 2015 merger between Samsung C&T and Cheil Industries was conducted illegally to allow Chairman Lee to inherit management rights at minimal cost. They suspected various unfair transactions led by the Future Strategy Office, then the core leadership of Samsung Group, including spreading false information, announcing false favorable news, purchasing major shareholders' stocks, illegal lobbying targeting the National Pension Service, and market manipulation through concentrated stock buybacks. As a result, Samsung C&T was merged at an unfavorable ratio without proper corporate valuation, causing losses to shareholders in what the prosecution concluded was a 'predatory succession.' The prosecution indicted Chairman Lee and others on September 1, 2020, for violations including the Capital Markets Act.

However, the court did not recognize the evidentiary value of text messages and other evidence from former Future Strategy Office deputy head Jang's mobile phone, which the prosecution presented as key evidence during the investigation. The court stated, "The prosecution did not follow the selection procedures for the electronic information extracted from defendant Jang Choong-ki's mobile phone," and "there was a serious violation of the warrant process, rendering the evidence inadmissible."

Furthermore, since the merger of the two companies proceeded through the decision-making processes of each board of directors, the court found it could not be considered that the Future Strategy Office exclusively decided the merger for Chairman Lee's succession. The court concluded, "There was a business purpose in this merger, and strengthening the group's control and stabilizing management (by Chairman Lee) also benefits Samsung C&T shareholders," adding, "Based solely on the evidence submitted by the prosecution, it cannot be concluded that the main purpose of this case was the management succession of defendant Lee Jae-yong."

The court also acquitted the charges related to false disclosures and accounting fraud concerning Samsung BioLogics, a subsidiary of Cheil Industries.

Kim Yoo-jin, a lawyer from Kim & Chang representing Chairman Lee, said immediately after the verdict, "I believe this ruling clearly confirms that the Samsung C&T merger and Samsung BioLogics' accounting treatment were lawful," and expressed sincere gratitude to the court for its wise judgment.

Since the first trial court acquitted all charges applied by the prosecution, it is expected that the prosecution will appeal, leading to intense legal battles in the second trial.

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