Prosecutors Who Allegedly Took Over Management Rights for Free Fail in 'Samsung Merger Investigation'

Prosecutors Caused Only 'Management Risks', Investigation Stumbles... Lee Jae-yong Acquitted in First Trial
Court: "No Proof of Crime in All Charges"... All 14 Defendants Acquitted

The court rejected the prosecution's claim that Samsung Group's management rights were inherited for free and acquitted Samsung Electronics Chairman Lee Jae-yong after more than three years and five months since his indictment. All former and current executives of Samsung Group who were tried on charges of various misconducts related to the merger of Cheil Industries and Samsung C&T to inherit management rights were acquitted in the first trial, dealing a blow to the prosecution that emphasized the unfair merger.

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

The Seoul Central District Court Criminal Division 25-2 (Presiding Judges Park Jeong-je, Ji Gwi-yeon, Park Jeong-gil) acquitted Chairman Lee on the 5th of charges including unfair trading practices and market manipulation under the Capital Markets Act, and breach of trust.

The court ruled that "there is no proof of crime for all the charges." The other 13 defendants, including former Samsung Group Future Strategy Office (FSO) Chief Choi Ji-sung, former FSO Strategy Team Leader Kim Jong-jung, and former FSO Deputy General Manager Jang Chung-gi, were also acquitted.

Chairman Lee and others were indicted on September 1, 2020, on charges of involvement in various unfair trades, market manipulation, and accounting fraud promoted by the FSO during the 2015 Cheil Industries-Samsung C&T merger process, aimed at inheriting management rights stably at minimal cost and strengthening control.

However, the court found that the merger of the two companies could not be deemed unfair, nor could it be concluded that it was intended to inherit management rights or strengthen control by Chairman Lee. It also ruled that there was no evidence to recognize that the merger, which was disadvantageous to Samsung C&T and its shareholders, caused property damage by losing opportunities to increase corporate and shareholder value.

The prosecution's large-scale investigation into Samsung Group and Chairman Lee over more than two years appears to have ultimately failed. The prosecution stumbled from the investigation stage. The investigation team judged that Samsung Group had announced false information and manipulated the market for the merger of Cheil Industries and Samsung C&T, and took the extreme step of requesting an arrest warrant for Chairman Lee, which was dismissed. Furthermore, the Supreme Prosecutors' Office's Investigation Review Committee, convened to decide whether to indict Chairman Lee, recommended stopping the investigation and non-prosecution, but the prosecution ignored this and indicted Lee without detention.

At the time, legal circles speculated that the prosecution, having conducted a long-term investigation, could not end it empty-handed and thus forced the indictment of Chairman Lee and others. Even in over 100 court sessions, the evidence and arguments presented by the prosecution were not clear enough to convince the court.

Nevertheless, the prosecution requested the court to sentence Chairman Lee, the ultimate person responsible and beneficiary of the illegal management succession charges, to five years in prison and a fine of 500 million won. However, the court rejected all the criminal charges applied to Chairman Lee by the prosecution. Moreover, the court acquitted all 13 other defendants indicted in this case, declaring a complete defeat for the prosecution.

Ultimately, the prosecution is expected to face criticism for causing management risks to Samsung Group due to its excessive investigation and indictment. Chairman Lee attended all of the more than 100 trials held weekly or biweekly over more than three years, undergoing trials all day while continuing his management activities.

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