The chair of Samsung Electronics, Jay Y. Lee, may be jailed for 5 years for a malicious merger between Samsung C&T and Cheil Industries to cement his control of the corporation. Moreover, the legal risk that Lee faces questions his ability to run the tech giant, grappling with lacklustre stock prices and growing competition.
However, last year, a lower court acquitted Lee of all charges, including stock price manipulation and accounting fraud, linked to the 2015 $8 billion merger between Samsung affiliates—Samsung C&T and Cheil Industries.
The lower court determined that the prosecution had not provided sufficient evidence to prove that Lee’s succession was the primary motive behind the merger, stating that there was a “rational business purpose.” It further asserted that the merger “benefited Samsung C&T shareholders by strengthening Lee’s control of the group and stabilising management.”
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However, the South Korean prosecutor’s office later appealed to the Seoul High Court, requesting a five-year prison sentence. They cited an August ruling that found Samsung BioLogics, a Cheil Industries affiliate, had violated accounting standards by inflating its assets to justify the merger.
Lee denied the wrongdoing and said, “I never intended to deceive or damage investors for personal gain.”
