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  4. Samsung's Jay Y Lee found not guilty of accounting fraud and stock manipulation: Details

Samsung's Jay Y Lee found not guilty of accounting fraud and stock manipulation: Details

Lee was charged with stock price rigging, breach of trust and accounting fraud in the course of the controversial 2015 merger, where three Samsung C&T shares were offered for one Cheil share, as per the reports.

Edited By: Saumya Nigam @snigam04 New Delhi Updated on: February 05, 2024 13:34 IST
samsung, Samsung Chairman Jay Y. Lee found not guilty
Image Source : REUTERS Samsung Chairman Jay Y. Lee found not guilty

A Seoul court cleared Lee Jae-yong, Chairman of Samsung Electronics with the controversial 2015 merger of two Samsung affiliates which was allegedly conducted to help him to take over control of South Korea's biggest conglomerate. The Seoul Central District Court delivered the not-guilty sentence for Lee, three years and five months after he was indicted on charges of involvement in market irregularities in the merger of Cheil Industries Inc. and Samsung C&T Corp. to solidify his managerial control of the group at a lower cost.

Lee was charged with stock price rigging, breach of trust and accounting fraud in the course of the controversial 2015 merger, where three Samsung C&T shares were offered for one Cheil share, reports Yonhap news agency.

The merger was seen as crucial to Lee's succession as the heir of the family-controlled group, as his father, Lee Kun-hee suffered a heart attack the previous year. Prosecutors suspected that the group manipulated the stock market to inflate the prices of Cheil and drive down Samsung C&T prices through various unfair practices, including disseminating false market information, mass purchasing the affiliates' stocks and illegally lobbying the National Pension Service, a major Samsung C&T shareholder, to support the merger.

Prosecutors suspected that such irregularities had been pursued since 2012 in favour of Lee, who was the biggest shareholder in Cheil with a 23.2 per cent share, and with the intent to help him tighten his control of Samsung C&T, the de facto holding company of Samsung Group.

Announcing the acquittal, the court found no illegalities in Lee's succession process.

The court concluded that Lee's succession as the group chairman or the solidification of his control of the group was not the sole purpose of the 2015 merger, nor was there any evidence showing that the merger inflicted financial losses on shareholders.

The court also found Lee not guilty of charges of involvement in the suspected accounting fraud at Samsung Biologics, a subsidiary of Cheil Industries.

"None of the criminal charges in this case have been proven," the court said.

Lee's side welcomed the not-guilty sentence. A lawyer representing Lee told reporters after the sentence: "I truly appreciate the court's wise decision."

The prosecution has a week to appeal the court ruling.

In the ruling, Choi Gee-sung, a former head of Samsung's now-disbanded control tower Future Strategy Office, two other former officials at the office and 10 others were also acquitted of charges related to the merger.

Prosecutors had demanded a five-year prison sentence for Lee, along with a fine of 500 million won ($373,550), pinpointing him as the ultimate person responsible for the alleged manipulation scheme.

Lee has denied the charges, claiming his interests were not considered during the merger of the affiliates. He has also pleaded with the court to acquit him so that he can "concentrate all resources on moving the company forward."

Lee was sentenced to 2.5 years in prison in a bribery case involving ousted former President Park Geun-hye and was released on parole in 2021 while serving the term. The following year (2022), he was given a special presidential pardon to have all his rights reinstated and return to the management.

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Inputs from IANS

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