A South Korean court yesterday acquitted Samsung Electronics Co chairman Jay Y. Lee of a raft of crimes linked to a controversial 2015 merger, his lawyers said.
Yonhap news agency reported that the Seoul Central District Court said it did “not recognize intention to harm shareholders” through the merger, which critics said was bad value and done mostly to ensure a smooth third-generational power transfer to Lee, a scion of Samsung’s founding family.
“Solidifying Lee’s control and ensuring his succession wasn’t the only purpose of the merger,” the court ruled, Yonhap said, adding that there were “no validations to prove prosecution’s charge.”
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The verdict clears Lee, who has already served jail time in a separate high-level fraud and embezzelment case, of several charges, including stock price rigging, breach of trust and accounting fraud, in the merger between Samsung C&T Corp — a construction and engineering firm — and Cheil Industries.
Critics say that the takeover deliberately undervalued the construction firm’s stock price, unfairly affecting its shareholders.
Three Samsung C&T shares were offered for one Cheil share, which prosecutors said “undermined the fundamentals of the market,” an earlier Yonhap report said.
In the merger process “multiple illegal acts were mobilized ... for the smooth succession of the group chief,” the prosecution said in its closing argument in November last year, demanding a five-year sentence.
“A structure in which company’s owner groups are allowed to pursue personal interest is the biggest cause of the worsening Korea discount,” the prosecution said, referring to the perceived global undervaluing of South Korean businesses. “We feel utterly distressed it was done by Samsung, the country’s No. 1 company.”
One observer said they were “appalled” by the court’s decision.
“The court appears to have based its ruling on the grounds that some of the evidence against Lee was collected without due process,” said Oh Se-hyung, director of civic group Citizens’ Coalition for Economic Justice.
“But that alone should not have given Lee a free pass and I question whether the prosecution did its best to hold him accountable,” Oh said.
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