Samsung Electronic Chairman Jay Y. Lee is currently under the pursuit of South Korean prosecutors. In a recent heated appeals court hearing, it was mentioned that the official is subject to serve a five-year prison sentence on top of paying $375,000 or 500 million KRW.
According to the prosecutors, Lee took advantage of the 2015 merger involving two Samsung affiliates. At that time, he manipulated the stock and committed accounting fraud. With this, he has a tight grip on the tech giant.
What Charges Are Involved in the 2015 Merger Scandal?
As per TechCrunch's report, the merger scandal orchestrated by Lee involved two affiliates: Samsung C&T, the company's construction arm, and Cheil Industries, the textile affiliate.
Prosecutors argue the merger inflated the stock value of Cheil while undervaluing Samsung C&T to cement managerial control through Lee. The accusations have also touched on fraudulent accounting practices within Samsung Biologics, which had close ties with Cheil.
Prosecutors have highlighted the precedential value of the case, saying, "This decision will serve as a guideline for the restructuring of 'chaebols' and corporate responsibility."
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The Road to Appeals: Background and Acquittal
Lee and 13 other former Samsung officials were acquitted of these charges in January 2023. Prosecutors are challenging their acquittal. Lee has maintained his innocence, arguing that the merger was conducted in compliance with normal operational practice.
However, the stakes remain high, as the appeals court decision—anticipated in early 2025—could significantly reshape South Korea's corporate governance landscape.
Samsung's Profit Continues to Slide Down
The hearing comes at a delicate time for Samsung, the world's top memory chip maker, as it struggles to keep its profits from slipping in an increasingly competitive tech landscape. It also comes as South Korea seeks to reform the structure of chaebol, family-run conglomerates that dominate the nation's economy.
Lee's legal issues go back to when he was indicted in 2020 for his involvement in the notorious deal. Since then, prosecutors have again and again pointed out Capital Market Act violations, arguing the merger worth $8 billion mainly served personal ambitions of Lee.
What It Means for South Korea's Corporate Scene
The fallout from this case could have a long-term impact not only on Samsung itself, but on South Korea's overall technology environment, including startups and smaller companies vying for market share with a heavy, chaebol-led leading presence.
If the government agrees with the prosecution, it would send a powerful legal message: that such future corporate malpractice will be tightened up throughout South Korea's biggest companies.
Leniency, on the other hand, may signal continued tolerance for the entrenched chaebol culture, undermining reforms aimed at increasing transparency and fairness.
As of this writing, the result of this highly publicized case serves, in turn, as a litmus test for South Korea's seriousness about corporate accountability and governance reforms.
Earlier this month, Tech Times reported that a South Korean insider had some information about the Samsung Galaxy Z Flip SE. According to the source, this particular model could be released a few months from now. It is expected to be cheaper than the standard model, considering that Samsung is positioning it for people who can't afford to buy the Z Flip 7.
