A South Korean appeals court heard on Monday that Samsung Electronics Chief Jay Y. Lee should spend five years in jail and pay a 500 million KRW fine, which is about $375,000. Ten months ago, Lee and 13 other former Samsung executives were found not guilty of changing stock prices or committing financial fraud in connection with the 2015 merger of Samsung subsidiaries, which gave Lee more power over the tech giant.
A news source in the area says that the appeals case will have a decision sometime between January and February 2025.
Two things make the hearing important. First, it comes at a tough time for Samsung, which is the biggest maker of memory chips and is seeing its profits drop. Second, it shows that the country is slowly trying to change how corporations are set up. This will have a lot of effects on both the global consumer electronics companies based in Korea and the competition in Korea’s tech ecosystem as a whole, including its startups.
On Monday, the prosecutors said, “The defendant did damage to the capital market’s foundation for the group’s succession.” Chaebol companies are big, family-run businesses in South Korea. The decision in this case will be used as a guide for future reform and accounting of chaebol companies.
The prosecutors said that if the suspects are given a break, the merger will be done in a way that serves their own interests by using illegal and quick methods without thinking twice.
For years, South Korean police have been after Lee. They wanted Lee to be jailed for five years and fined 500 million KRW in November of last year, just like they did today. They said this because Lee was accused of breaking the Capital Market Act in connection with a $8 billion merger of Samsung companies in 2015. They said that the merger made it easier for Lee to take over the Korean electronics business.
During the November 2023 meeting, Lee denied the accusations of wrongdoing and said that the merger process was in line with how the company normally does things.
Lee, who was vice-chair of Samsung Electronics at the time, and other former Samsung executives were charged in September 2020 with pushing for the merger of Cheil Industries, Samsung’s textile subsidiary, with Samsung C&T, its construction subsidiary, so that they could run the tech giant in 2015.
Also Read: Samsung Ceo Jay Y. Lee Was Found Not Guilty in a 2015 Merger Case
As part of the same case, they were also accused of using fraud to boost the stock prices of Cheil and Samsung C&T and Samsung Biologics, in which Cheil had a big share. The prosecution said that Samsung had a plan to join that would help Lee gain more power and control over the company.
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