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Prosecutors in South Korea requested that Samsung Chairman Jay Y. Lee be sentenced to five years in prison and fined 500 million KRW (around $375,000) for a disputed affiliate merger.
In February, Lee was cleared of charges related to financial fraud and market manipulation in the 2015 merger of Cheil Industries and Samsung C&T, which harmed minority shareholders. However, prosecutors have since appealed the decision.
They argued that the defendant undermined the capital market’s foundation for leadership transition and warned that leniency would encourage future unlawful mergers prioritizing the defendants’ interests.
🇰🇷 Samsung Chair Faces Merger Charges Again
Prosecutors accuse Jay Y. Lee of manipulating a 2015 merger to solidify control over Samsung. Though earlier acquitted, the appeal revives allegations of fraud and shareholder harm. pic.twitter.com/WephLmKvqP
— DiPrimer 🇺🇸 (@diprimer_usa) November 25, 2024
The appeal hearings conclude on November 25, with a ruling anticipated between January and February 2025, local media reports.
Allegations Against Lee and Executives in Samsung Merger
South Korean prosecutors have targeted Lee, the third-generation head of Samsung, for years.
In September 2020, Lee and other executives were charged with orchestrating the 2015 merger to strengthen Lee’s control over Samsung Electronics. As part of this strategy, they were also charged with inflating stock values and manipulating financial records at Samsung Biologics.
In November 2023, prosecutors called for a five-year prison term and a 500 million KRW fine over the $8 billion merger, which they argued helped Lee take leadership of the company following his father’s 2014 heart attack. Lee denied the charges of wrongdoing, asserting that the merger followed routine company procedures.
Samsung’s Declining Profits and Corporate Restructuring
The hearing comes as Lee faces growing scrutiny over his leadership of Samsung. The company, a global leader in memory chips and smartphones, is navigating a challenging period with slowing profits and falling stock prices.
According to TechCrunch, the case also reflects South Korea’s gradual efforts to reform corporate structures, which could affect the country’s consumer electronics sector and its broader tech ecosystem, including start-up companies.
