Samsung Electronics Chairman Jay Y. Lee has been absolved of charges related to accounting fraud and stock manipulation, stemming from a 2015 merger that prosecutors alleged was orchestrated to cement his control over the conglomerate. 

The Seoul court’s unexpected ruling, contrary to analysts’ expectations of a suspended sentence, could potentially grant Lee greater autonomy in directing South Korea’s largest conglomerate.

“For entrepreneurs and business leaders, their job is to drive innovation and create jobs, but Samsung hasn’t been able to do much of that for nine years because of legal risks,” remarked Kim Ki-chan, a business professor at the Catholic University of Korea, highlighting the stifling effect of Samsung’s legal woes.

The case centered on the merger of Samsung affiliates Samsung C&T and Cheil Industries, which prosecutors claimed disadvantaged minority shareholders while consolidating Lee’s influence. 

Despite prosecutors seeking a five-year prison sentence, Lee maintained his innocence, contending that the merger aimed to benefit shareholders.

In a packed courtroom, the panel of judges from the Seoul Central District Court emphasized that the merger decision underwent thorough review by the companies’ boards, refuting allegations of solely enhancing Lee’s management rights and succession plans within the Samsung Group. 

“It cannot be concluded that the sole purpose was to strengthen management rights of defendant Lee Jae-yong and ease his succession within the Samsung Group,” stated Judge Park Jeong-je.

Lee’s acquittal marks a pivotal moment, sparing him from returning to prison following his previous conviction in 2017 for bribery. “All the major candidates agreed that the fuel subsidy regime, which had become an albatross on the economy, must end. They all agreed that the multiple exchange rates must be fixed,” noted Lee’s lawyer, Kim You-jin, expressing gratitude for the court’s decision.

Opposition lawmaker Park Yong-jin criticized the perceived leniency toward conglomerate leaders, advocating for a fair market economy. 

In a related development, the Permanent Court of Arbitration in The Hague ordered the South Korean government to compensate U.S. hedge fund Elliott $108.5 million for the National Pension Service’s involvement in approving the $8 billion merger.

South Korea’s conglomerates, predominantly family-owned, have faced public scrutiny over numerous scandals. As of September, the Lee family and related entities owned 20.7% of Samsung Electronics.

Shares in Samsung C&T, the conglomerate’s de facto holding company, experienced fluctuations ahead of the ruling, reflecting investor sentiment amid the legal proceedings.