Samsung Electronics Chairman Jay Y. Lee was acquitted of accounting fraud and stock manipulation charges by a Seoul appeals court on Monday, resolving long-standing legal risks tied to his leadership of the tech giant. The Seoul High Court upheld the dismissal of all charges related to a 2015 merger, which prosecutors claimed was meant to solidify Lee’s control over Samsung.
The ruling marks a significant moment for Lee, who has faced legal challenges for nearly a decade, including from the $8 billion merger between two Samsung affiliates, Samsung C&T and Cheil Industries. This merger was linked to Lee’s succession after his father, Lee Kun-hee, fell into a coma in 2014.
Despite concerns over Lee’s leadership due to the legal battles, his lawyer expressed hope that the ruling would allow him to focus on managing Samsung, which has been struggling with increased competition and weak stock performance. The Seoul High Court dismissed prosecutors’ claim that the merger caused financial losses for Samsung C&T’s shareholders, even as it acknowledged “inappropriate acts” in the accounting practices of Samsung BioLogics, a key affiliate.
The court found that the merger was based on rational reasons and processes. Lee has always denied any wrongdoing, asserting that he never intended to deceive investors for personal gain.
While the ruling may relieve Lee of legal concerns, Samsung’s stock fell 2.7% following the decision. Critics, including a civic group, argued that the court was lenient, highlighting the merger’s impact on investors like the country’s pension fund. Additionally, the controversial merger has raised ongoing issues related to corporate governance in South Korea’s family-owned conglomerates.
Lee had previously served 18 months in jail on bribery charges before his release in 2021, a part of the corruption scandal that led to the downfall of then-President Park Geun-hye. In 2022, he was pardoned by President Yoon Suk Yeol, who justified the move by stating that Lee’s leadership was essential for South Korea’s economic recovery.
Despite the legal victory, Lee now faces the challenge of proving his management capabilities amid a difficult business climate, including slow sales in Samsung’s AI chip sector. Additionally, Samsung’s struggles with smaller competitor SK Hynix, particularly in supplying high-bandwidth memory chips for Nvidia’s AI units, have put a damper on the company’s profits from the booming AI industry.
