Samsung Chairman Lee Jae-yong has been exonerated by a South Korean court on Monday, February 5.
Jae-yong was accused of strengthening his influence over the tech giant through an unlawful merger between Samsung affiliates in 2015.
The court cited the lack of evidence as a major factor that led to the dropping of the criminal charges against Lee. All 14 defendants have been pardoned.
Prosecutors had filed charges asking for a five-year jail term for the Chairman and an additional fine of 500 million won (US $376,000). He had been indicted on grounds of “stock-price rigging and accounting fraud”.
Lee has been in charge of the company since 2014, after his late father and former chairman Lee Kun-hee suffered a heart attack. The third generation corporate heir was appointed as the chairman in 2022. However, the 2015 merger between Samsung C&T and Cheil Industries Inc. garnered a lot of attention for the wrong reasons. Since then, Jae-yong has had to deal with a number of legal battles which culminated into a massive political debacle leading to the impeachment of former President Park Geun-hye.
He had previously served 18months in prison out of a 30-month sentence in 2017 on account of bribing a close aid of Park to facilitate the merger.
A retrial was eventually initiated, resulting in a two-year prison sentence and a 5-year employment ban at Samsung. However, he was pardoned by the President in 2022 to combat the nation’s “economic crisis”.
However, the Samsung chairman has repeatedly asserted his innocence stating that the merger was a “normal business activity” done to profit shareholders.
The Seoul Central District Court verdict on Monday was in relation to an original case dating back to 2015. The decision has been disapproved by many including activists and politicians. As per Time, “People’s Solidarity for Participatory Democracy, a major civic group based in Seoul, described the ruling as a setback for years of efforts to reform the management culture of South Korea’s family-owned conglomerates and their cozy ties with the government.”
Samsung’s Plummeting Profits
Samsung, “the world’s largest memory chip, smartphone, and TV maker” suffered a 34% decline in operating profit during the last quarter, October-December, of 2023 due to lowered demands of its televisions and other electronic goods. The company is thus, planning on revamping its microchip technology to meet the market demands like that of artificial intelligence (AI) by upgrading its capacity by 2.5 times this year.
Last year, the company also lost the top spot to Apple for the very first time since 2010 in the global smartphone market.
“In 2023, Apple dominated the smartphone market with 234.6 million iPhone shipments, securing a substantial 20.1% global market share and experiencing a 3.7% annual growth, as revealed by the latest preliminary data from the IDC (International Data Corporation). Meanwhile Samsung faced a 13.6% decline in smartphone shipments, totalling 2226.6 million units and claiming a 19.4% market share, according to IDC’s Worldwide Quarterly Mobile Phone Tracker.”
