2024-02-12 21:00:00
Samsung Electronics Chairman Lee Jae-yong leaving the Seoul Central District Court on the 5th. (Yonhap News)
Samsung Electronics Chairman Lee Jae-yong was found not guilty in the first trial related to ‘management succession’, but the prosecution appealed after three days, leading to speculation that the management uncertainty that was feared will continue for the time being.
According to the business and legal circles on the 12th, the Seoul Central District Prosecutors’ Office made a first-trial ruling on the 8th, “regarding the purpose and circumstances of succession of group control through the merger of Samsung C&T and Cheil Industries, judgment of evidence, recognition of facts, and judgment of legal principles regarding accounting fraud and illegal trading practices.” He submitted an appeal, saying, “There is a big difference of opinion.”
Previously, on the 5th, Criminal Agreement Division 25-2 of the Seoul Central District Court acquitted Chairman Lee, who was indicted on 19 charges including illegal trading, market manipulation, and breach of trust under the Capital Markets Act, saying, “There is no proof of a crime in any of the indictments.” .
The prosecution’s appeal heralds another journey in the judicial risk of Chairman Lee Jae-yong and Samsung Electronics. In the case of the first trial, it was held 107 times over 3 years and 5 months from October 2020. So far, Chairman Lee has appeared in court a total of 96 times, excluding accompanying the president on overseas trips. The appeal trial lasts at least one year, but can last up to four years. If the prosecution appeals against the appeal, the legal world predicts that it will take another two to three years for the Supreme Court to reach a final decision. In the worst case, you could be tied up in judicial shackles for nearly 10 years.
After the acquittal, people inside and outside the business world believed that Chairman Lee’s judicial risk had been resolved, and there were expectations that Samsung would accelerate its efforts to make large-scale investments and discover future businesses.
Kim Dong-won, a researcher at KB Securities, said, “Chairman Lee is more likely to actively participate in Samsung Group management in the future,” and added, “Accordingly, rapid decision-making regarding Samsung Group’s strengthening of shareholder return policy, mergers and acquisitions (M&A), and expansion of new investments will be possible.” “I saw it.
In fact, as if to revive these expectations, Chairman Lee immediately began on-site management after the first trial ruling by touring local business sites, including inspecting Samsung SDI’s battery business in Middle East countries such as the United Arab Emirates (UAE) and Malaysia.
However, if the appeal trial proceeds, restrictions on overseas business trips will inevitably arise again as in the first trial. Even during the first trial, Chairman Lee attended the trial once or twice a week and went on overseas business trips during holidays when there was no trial. In particular, inside and outside the business world, CEOs of global big tech companies are traveling around the world and moving quickly to discover new businesses, focusing on artificial intelligence (AI). As supply chains are being reorganized due to conflicts between the United States and China, judicial risks for CEOs still remain. They voice concerns that it is holding them back.
Kang Seok-gu, head of the Korea Chamber of Commerce and Industry’s investigation division, expressed concern, saying, “I thought it was fortunate that the first trial acquittal eliminated uncertainty from the company’s perspective and increased the possibility of proactively addressing issues that need to be addressed in the future, but uncertainty has increased.”
An official in the business world said, “It wouldn’t be difficult to completely overturn the results of the first trial,” but added, “However, it has become difficult for Chairman Lee to fully concentrate on management due to preparations for and attendance at the appeal trial.”
This means that not only will the return of registered directors for responsible management be postponed until after the appeals trial, but also large-scale mergers and acquisitions (M&As) or large-scale investments that were highly anticipated may also be delayed. Currently, Chairman Lee is the only unregistered executive among the four major conglomerate heads. In addition, Samsung’s large-scale M&As are at a standstill, with the last being the acquisition of Harman, an American electronics company, in which it invested 9 trillion won in 2017.
Reporter Park Cheol-joong [email protected]
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