Lee Jae-Yong: Samsung Will Overcome Challenges Amid Misunderstandings

Lee Jae-Yong, the Chairman of Samsung Electronics, stated during the sentencing hearing for the 'illegal succession of management rights' case that he had no intention of personal gain through the merger of Cheil Industries (제일모직) and Samsung C&T (삼성물산).

On November 25, the 13th Criminal Division of the Seoul High Court, presided over by Judge Baek Kang-Jin, held a sentencing hearing for Lee and 13 other defendants who were indicted on 19 charges, including violations of the Capital Markets Act.

In his five-minute closing statement, Lee expressed, "I believed that the merger of the two companies would undoubtedly benefit the future. I had no intention of harming shareholders or deceiving investors for personal gain."

He continued, "If there are any mistakes for which I should be held accountable under the strict standards of the law, I will fully accept that responsibility. I ask for leniency for the other defendants, who have dedicated their lives to the company."

Lee acknowledged the current challenges facing Samsung, stating, "The reality we face is tougher than ever, but we will overcome these difficulties and move forward. I will do everything possible to ensure that Samsung can be reborn as a company loved by the public."

During his statement, Lee's left hand trembled as he held the microphone, and he cleared his throat multiple times. His voice quivered when he mentioned, "I have renewed my resolve after receiving both critical and encouraging feedback regarding Samsung."

Lee was indicted in September 2020 for allegedly manipulating stock prices to facilitate the merger of Cheil Industries and Samsung C&T, thereby strengthening his control over the Samsung Group. He is also accused of being involved in accounting fraud at Samsung Biologics (삼성바이오로직스), a subsidiary of Cheil Industries, which constitutes a violation of the External Audit Act.

As the largest shareholder of Cheil Industries, holding 23.2% of its shares, Lee is alleged to have engaged in illegal activities such as stock price manipulation and accounting fraud to inflate the value of Cheil Industries while deflating that of Samsung C&T, allowing the merger to occur in his favor.

On this day, the prosecution requested that the court impose the same sentence as in the first trial for all defendants, including Lee. They argued, "The essence of this case is that various lies and fraud were employed to transfer losses to innocent investors for the sake of Lee's succession. The defendants abused their authority and exploited information asymmetry to undermine the institutional mechanisms designed to prevent the abuse of economic power."

The prosecution further stated, "What the defendants have damaged are the constitutional values that underpin our economy's fairness and the capital market. We hope this case will lead to a more transparent and fair capital market, and we ask the court to overturn the original ruling and find the defendants guilty based on the law and principles."

In a previous ruling in February, the first trial found Lee not guilty on all 19 charges, stating that there was insufficient evidence to conclude that the merger was solely for the purpose of Lee's succession, noting that there were also business objectives for Samsung C&T. The court also indicated that the finance team at Samsung Biologics appeared to have been attempting to handle accounting matters correctly with their accountants.

Meanwhile, during the appeals process, the prosecution amended the indictment three times, reflecting a ruling from the Seoul Administrative Court in August that acknowledged the existence of accounting fraud at Samsung Biologics during the merger process. This ruling contradicts the first trial's finding of no accounting fraud, leading the prosecution to urge the court to consider the administrative court's judgment, which indicated a deviation from principled accounting practices.