The legal battle involving Samsung Electronics Chairman Lee Jae-yong continues as prosecutors have decided to appeal the recent court decision that acquitted him of charges regarding market irregularities in a high-profile merger. Lee was alleged to have been a part of activities that illegally boosted the value of Cheil Industries, one of the affiliates of the Samsung Group, during its merger with Samsung C&T.
Following his acquittal, the Seoul Central District Prosecutors Office announced they were not satisfied with the ruling and proceeded to file an appeal. They had initially sought a five-year jail term for Lee over his suspected role in engineering the merger to cement his control within the conglomerate, particularly within Samsung Electronics—the most eminent part of Samsung Group. The merger in question involved Cheil Industries Inc. and Samsung C&T Corp., with the intended outcome being in favor of Lee’s succession planning at a reduced financial cost. The appeal was made within the one-week time frame granted after the verdict.
The contentious merger of Cheil Industries and Samsung C&T took place in 2015 following the heart attack and incapacitation of Lee’s father, Lee Kun-hee, the then-chief of Samsung. Cheil Industries specialized in various sectors, including fashion, chemicals, and marketing, while Samsung C&T was known for construction, engineering, and trading services and served as a holding company for Samsung Electronics. The acquisition deal was valued at an estimated $7.7 billion.
Assertions by the prosecution pointed toward deliberate manipulation by high-ranking Samsung officials in influencing the stock prices of the two companies to favor the merger. Specifically, it was claimed that these executives, including Lee Jae-yong, were involved in keeping the price of Cheil Industries stock high while suppressing that of Samsung C&T, thereby reducing the cost of the merger.
Lee Jae-yong had previously served 18 months in prison related to a different case where he was accused of bribing a confidant of a former South Korean president. His release came about in 2021 following a presidential pardon.
The dispute continues to garner attention, with the recent development intensifying the legal scrutiny on the Samsung conglomerate and its leadership practices. The outcome of the appeal remains to be seen, with significant implications for the electronics giant and its chairman.
