South Korean court clears Samsung chairman in merger fraud case

Independent

17-07-2025

South Korea 's top court has cleared Samsung Electronics Chairman Jay Y. Lee of accounting fraud and stock manipulation, permanently removing a long-running legal risk for the head of the country's biggest company.
The Supreme Court upheld an appeals court's ruling dismissing all charges in the case involving an $8 billion merger in 2015.
The ruling frees Mr Lee to focus on Samsung's push to catch up in a global race to develop cutting-edge AI chips.
In 2024, a lower court had also cleared Mr Lee of the charges relating to a deal between two Samsung affiliates, Samsung C&T and Cheil Industries, which prosecutors said was designed to cement Mr Lee's control of the tech giant.
"The Supreme Court ruling clears a layer of legal uncertainty, which could be a long-term positive for Samsung," said NH Investment & Securities senior analyst Ryu Young-ho.
"It remains to be seen how directly and proactively he will engage going forward, but if the owner takes a more active role, it could allow management to focus more on long-term initiatives rather than short-term results."
Samsung Electronics shares closed up 3.1 per cent, outperforming a near-flat benchmark KOSPI.
Analysts attributed the rise to the removal of legal uncertainty surrounding Samsung, as well as investors switching to the company after Goldman Sachs downgraded local rival SK Hynix, sending its shares down as much as 9.5 per cent.
The Supreme Court verdict was widely expected, but comes at a critical moment for Mr Lee, who has faced mounting questions about his ability to lead Samsung Electronics – the world's top memory chip and No.2 smartphone maker.
Samsung's lawyers said they were "sincerely grateful" to the court for its decision and added in a statement that the ruling confirmed that the merger was legal.
For nearly a decade, Mr Lee has faced legal challenges, including those from the merger that paved the way for his succession after his father, Lee Kun-hee, had a heart attack in 2014 that left him in a coma.
Billionaire previously pardoned
Business lobby groups welcomed the court's decision, framing it as a stabilising development for the South Korean economy.
The Korea Enterprises Federation said the ruling removes a major legal burden for Samsung and comes at a time of intensifying global competition in high-tech industries like AI and semiconductors as well as economic pressure from U.S. trade tariffs.
"Samsung's role as a leading South Korean company is more critical than ever," the group said in a statement.
The group said it hoped Samsung, under Mr Lee's leadership, would step up investment and innovation, helping to create jobs and bolster South Korea's economic rebound.
Mr Lee, 57, spent 18 months in jail for bribery in a separate case related to former President Park Geun-hye, but was pardoned by then-President Yoon Suk Yeol, with the Justice Ministry citing a need for the billionaire businessman to help overcome a national economic crisis.
The family-run conglomerates, or chaebols, have long been revered for helping transform South Korea into a global economic powerhouse, but also criticised for opaque dealings and for stifling small businesses and start-ups.
Earlier in July, Samsung projected a worse-than-expected 56 per cent plunge in second-quarter operating profit due to weak AI chip sales, deepening investor concerns over the tech giant's ability to revive its struggling semiconductor business.
Park Ju-gun, head of corporate analysis firm Leaders Index, said Mr Lee now faces dual challenges of tightening his grip on the conglomerate while steering Samsung back to leadership in key sectors.
"He must both defend Samsung's core businesses and find new growth engines, all while consolidating his control," Park said.