Prosecutors requested a five-year prison term and a 500 million won fine for Samsung Electronics President Lee Jae-yong. This appeal case comes 10 months after Chairman Lee and 13 former Samsung executives were found not guilty on charges of stock price manipulation and accounting fraud related to the merger of Samsung affiliates in 2015, which strengthened his control over Samsung.
According to local media, a decision on the appeal case is expected between January and February 2025.
Hearings are important for two reasons. First, it comes as Samsung, a leading manufacturer of memory chips, is going through difficult times as it navigates slowing profits. Second, this is a sign that the country is slowly making efforts to reform its corporate structure. This will have a significant impact not only on global home appliances based overseas, but also on competition in the Korean technology ecosystem. That startup.
Prosecutors said on Monday, “The defendant undermined the capital market foundation for the group’s succession… , and the accounting of the future.”
The prosecution added that if the defendants receive leniency, they will proceed with the merger without delay in a way that prioritizes the interests of the defendants by using illegal and expedient means.
South Korean prosecutors have been tracking Lee Myung-bak for years. In November last year, Vice Chairman Lee was sentenced to five years in prison and fined 500 million won (same as today) on charges of violating the Capital Markets Act in connection with the merger of Samsung affiliates worth $8 billion in 2015. They claimed the merger helped Mr. Lee take control of the South Korean electronics company.
At a hearing in November 2023, Lee refuted the allegations of misconduct and argued that the merger process was within the company’s standard operating procedures.
In September 2020, Vice Chairman Lee, along with other former Samsung executives, was accused of advocating the merger of Samsung’s textile subsidiary Cheil Industries and its construction arm Samsung C&T. Controlled in 2015.
In the same case, they were also charged with inflating the stock prices of Cheil Industries and Samsung C&T and accounting fraud at Samsung BioLogics, of which Cheil Industries is the majority shareholder. Prosecutors claimed that Samsung had a merger strategy that helped solidify Chairman Lee’s management rights and help him succeed to management rights.
