Korea’s top court acquits Samsung head of unfair merger charges

Samsung Electronics Executive Chairman Lee Jae-yong waits for then-Democratic Party of Korea Chairman Lee Jae Myung at a Samsung office in Gangnam District, Seoul, March 20. Korea Times photo by Jung Da-bin

By Nam Hyun-woo

• Published Jul 17, 2025 11:32 AM KST
• Updated Jul 17, 2025 3:13 PM KST

Lee Jae-yong back in business to resuscitate tech giant's competitiveness

The Supreme Court on Thursday acquitted Samsung Electronics Executive Chairman Lee Jae-yong of charges that he was involved in wrongdoing surrounding a controversial merger between two Samsung units.

As the ruling freed Lee from his most pressing legal risks, the chairman is expected to concentrate more on his role as the head of Samsung Electronics, which is now reeling from contracted profitability due to a protracted slowdown in its semiconductor and other future-oriented businesses.

The top court upheld the Seoul High Court’s ruling which found him not guilty on all 19 charges filed by the prosecution, including unfair influence peddling, accounting fraud and breach of trust.

It found the appellate court committed no misinterpretation of law in its ruling, as well as upholding the high court’s view that some of the evidence presented by prosecutors had been obtained unlawfully, while other evidence lacked admissibility.

The ruling came four years and 10 months after Lee was indicted on 19 charges related to his alleged involvement in a scheme orchestrated by Samsung’s now-defunct Future Strategy Office to help him secure control of Samsung Group at minimal cost through the merger of Samsung C&T and Cheil Industries, which was approved at the former’s shareholder meeting in 2015.

At the time of the merger, Samsung C&T held a 4.06 percent stake in the conglomerate’s flagship unit, Samsung Electronics. Lee, who then was the largest shareholder of Cheil Industries and had no stake in Samsung C&T, was able to secure control of Samsung Electronics through the merger.

The merger ratio between Samsung C&T and Cheil Industries at the time was 0.35 to 1, and prosecutors claimed the strategy office had arranged the timing and the ratio of the merger to favor Cheil Industries over Samsung C&T.

In February last year, the Seoul Central District Court found him not guilty on all 19 charges. The prosecutors revised the indictment after reflecting a separate court ruling in August on the accounting of Samsung Biologics, which was a Cheil subsidiary, but the Seoul High Court upheld the lower court ruling in February this year.

“Today, the Supreme Court clearly affirmed the legality of the Samsung C&T merger and Samsung Biologics’ accounting practices,” Lee’s legal representatives said in a statement. “We sincerely thank the court for its wise judgment after five years of thorough and diligent proceedings.”

During the ruling, the top court also acquitted 13 former Future Strategy Office executives, including the office’s former head Choi Gee-sung.

Lee’s acquittal drew favorable responses from Korea’s business community.

“We respect and welcome the Supreme Court’s ruling on the merger,” said Kang Seok-gu, research division head of the Korea Chamber of Commerce and Industry. “Amid intensifying global competition in high-tech industries, the ruling is expected not only to resolve management risks for the company but also to have a positive effect on the entire Korean economy.”

Korea Enterprises Federation also said in a statement that the significance of Samsung Electronics’ role for the Korean industry is ever increasing and expressed hopes that Lee will spearhead efforts to discover new growth engines and create more jobs.

Lee to increase presence in decision-making

As the ruling clears Lee’s pressing legal risks, the business community expects his presence in Samsung Group will become much more noticeable, and a greater leadership role for him will result in Samsung Electronics and other affiliates becoming more proactive in their business activities.

Lee became executive chairman of Samsung Electronics in 2022, but he is not a board member. He served a three-year term on the board from 2016 to 2019 when he was vice chairman, but has not returned since, apparently to prevent his legal troubles from affecting the company.

Against this backdrop, calls have been growing for him to return to the board in order to take on more responsibilities for the company’s decision-making processes.

While Lee was keeping a low profile in running the group, Samsung Electronics saw its profitability contracted as it apparently failed to align itself in the fast-changing industry transition to artificial intelligence (AI). Earlier this month, the company estimated that its operating profit for the second quarter will likely remain at 4.6 trillion won, ($3.33 billion), down 56 percent from a year earlier.

Lee’s return to the company is also stoking expectations for Samsung Electronics’ aggressive approach in the mergers and acquisitions (M&A) market.

In recent months, Samsung Electronics took over six firms — Rainbow Robotics, Oxford Semantic Technologies, Sonio, FlaktGroup, Masimo’s audio division and Xealth. Those firms are recognized as budding players in robotics, AI, medtech and health care sectors, but not as promising as Harman, an audio giant that Samsung Electronics acquired in 2017 and now stands as one of its stable cash cows.

Samsung Electronics is also struggling with its semiconductor business, which is one of the two main pillars of the company’s earnings structure. The market believes the company's recovery requires it to secure technologies that can either generate immediate profits or restore its fundamental competitiveness, which can be possible through a major takeover deal in the semiconductor sector.

“A takeover deal in the semiconductor sector won’t be easy, but considering Samsung’s current competitiveness, the company is likely to keep the door open for M&A opportunities to address weaknesses in its chip business,” an industry official said.