Unfair Merger and Fraudulent Accounting Case Heading to Second Trial... Lee's Steps Likely to Accelerate

Lee Jae-yong's Side Ultimately Does Not Appeal... Prosecution Appeals
Second Trial Panel Assigned Possibly This Week
Accelerating Management Moves Before Trial Begins

The 'judicial risk' facing Samsung Electronics Chairman Lee Jae-yong, which seemed to have ended after seven years, is set to resume as early as the end of this month.

As the 'unfair merger and accounting fraud' case moves to the second trial, restrictions on Chairman Lee's management activities have become inevitable once again. Accordingly, the business and legal communities analyze that Lee's steps will accelerate as he plans major investments and mergers and acquisitions (M&A) before the full-scale trial begins.

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@

According to the business and legal circles on the 14th, Lee's side received the prosecution's appeal documents from the Criminal Division 25-2 of the Seoul Central District Court the day before, reviewed them, and decided not to appeal. It was confirmed that only the necessary document submissions for moving to the second trial were made. Since the trial's move to the second trial was already confirmed by the prosecution's appeal, Lee's decision not to appeal suggests that there is no problem with the first trial ruling, which acquitted him of all 19 charges. The period during which an appeal could be filed ended at midnight the previous day. Accordingly, the Seoul High Court is expected to assign the panel to hear Lee's case for the second time and coordinate the trial schedule within this week.

Will the trial be held once or twice a week as in the first trial?

The legal community anticipates that Lee's side and the prosecution will strongly clash over the trial schedule from the preparation stage of the second trial. During the first trial, Lee had difficulty managing group affairs due to the schedule requiring him to attend trial once or twice a week. In particular, he was reportedly unable to undertake overseas business trips to properly oversee the global semiconductor and smartphone markets. Meetings with CEOs and influential figures of global companies were also restricted.

The choice not to appeal appears to be in the same context. Since Lee did not appeal, the second trial panel will only re-examine the issues raised by the prosecution's appeal. Had Lee appealed, the second trial panel would have had to review more matters, including Lee's appeal points, which would have prolonged the trial, but this was not the case.

Lee is expected to accelerate his management activities before the full-scale trial begins, hoping for the court's consideration to minimize the trial schedule. The business community expects him to make bold decisions on large-scale investments and M&A to seek a turnaround in the global market.

Samsung Electronics announced on the 12th that Chairman Lee Jae-yong visited Seremban, Malaysia, on the 9th as his first overseas business trip to inspect the battery business. The photo shows Chairman Lee Jae-yong inspecting Plant 1 of the SDI production corporation in Seremban, Malaysia. Photo by Yonhap News.

During the Lunar New Year holidays from February 9 to 11, Lee visited Samsung SDI's production corporation in Seremban, Malaysia, as well as the production site of Battery Plant 1 and the construction site of Plant 2, leaving a message to employees that reflects this. Lee urged, "Do not be swayed by short-term performance; lead change with bold challenges." He also said, "Let's create new value and secure solid competitiveness." Analysts interpret his visit to Samsung SDI, which has recently faced difficulties in global competition, as highly significant. Samsung SDI achieved record-high sales of 22.7 trillion won and operating profit of 1.6 trillion won last year but has been affected by the slowdown in the global markets for power tools and electric vehicles. It is reported that Lee decided on this site visit to support Samsung SDI.

Criticism of the prosecution as "arrogant infallibility" despite a 0 to 19 complete defeat

Sharp criticism toward the prosecution, which appealed, is emerging not only from the business community but also from the legal circles. It is argued that the prosecution appealed mechanically or without reason, even though it seems difficult for the acquittal to be overturned in the second trial.

Professor Cho Dong-geun of Myongji University's Department of Economics wrote on his social media account, "(The first trial ruling) was a complete defeat for the prosecution, like losing 0 to 19 in a sports game," emphasizing, "It is natural for the prosecution to reflect on whether the indictment was wrong." He added, "The prosecution tends to mechanically appeal whenever the first trial results in acquittal or a sentence below a certain threshold of the requested punishment," pointing out, "There is an underlying 'arrogant infallibility' that the prosecution's judgment cannot be wrong, even if the court's judgment might be."

A lawyer in Seocho-dong assessed, "The prosecution is receiving more criticism because it appealed after the arrest warrant was dismissed in June 2020 and the prosecution investigation review committee recommended suspension of investigation and non-prosecution by a 10 to 3 vote, yet the prosecution indicted and the court ruled not guilty." He added, "If acquittal is also issued in the second trial, it will be difficult to appeal further."

Some voices are gaining momentum to establish measures to block the prosecution's 'blanket appeals.' Cases from advanced countries such as the United States, where the federal constitution prohibits the prosecution from appealing if the first trial results in acquittal, are often cited as grounds. President Yoon Suk-yeol, who served as Prosecutor General in August 2019, said, "The prosecution exercises the right to prosecute with the country's budget and salary, so it does not consider the defendant (who has to pay more for lawyer fees)," and added, "Appeals and final appeals should be carefully reviewed, and if there is no possibility, the prosecuted person should not be pushed into the second or third trial." Prosecutor General Lee Won-seok also stated at the National Assembly confirmation hearing in September 2022, "I will refrain from mechanical appeals."

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