S Korean court acquits Samsung chief over 2015 merger case

SEOUL: A South Korean court acquitted Samsung Electronics chief Lee Jae-yong on Monday of a raft of crimes linked to a controversial 2015 merger, Lee’s lawyers said.

Yonhap news agency reported that the court said it did “not recognise intention to harm shareholders” through the merger, which critics had claimed 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, according to the Yonhap news agency, adding that there were “no validations to prove prosecution’s charge”.

The verdict from the Seoul Central District Court clears Lee of several charges, including stock price rigging, breach of trust and accounting fraud, in the 2015 merger between Samsung C&T — a construction and engineering firm — and Cheil Industries.

“Today’s verdict has made it clear the merger was legitimate. We sincerely thank the court for its judicious judgement,” Lee’s attorneys said in a brief statement.

Critics argue that the 2015 takeover deliberately undervalued the construction firm’s stock price, unfairly affecting its shareholders.

Lee, who has already served jail time over a high-level fraud and embezzlement case, is the current executive chairman of Samsung Electronics, the crown jewel of the sprawling Samsung group.

In the deal, three Samsung C&T shares were offered for one Cheil share, a transaction prosecutors claimed had “undermined the fundamentals of the market”, according to an earlier Yonhap report.

In the merger process “multiple illegal acts were mobilised... for the smooth succession of the group chief”, the prosecution said in its closing argument in November, 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 number-one company.” Lee said in court he had not been driven by “personal interest in the merger”.