Lee Jae-yong Appears in Court After 3 Months: "Thankful for Trial Postponement"

Appeared in black suit without tie... Look noticeably thinner after appendicitis surgery
Charged with unfair trading and market manipulation under Capital Markets Act, and breach of duty

Lee Jae-yong, Vice Chairman of Samsung Electronics [Photo by Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Lee Jae-yong, Vice Chairman of Samsung Electronics, who was sentenced to 2 years and 6 months in prison in the retrial of the 'state affairs manipulation' case and is currently incarcerated, appeared in court again on the 22nd after about three months. Lee’s side expressed gratitude for the postponement of the trial last month due to surgery for acute appendicitis.

On this day, the Seoul Central District Court Criminal Division 25-2 (Presiding Judge Park Jeong-je) held a trial for Lee and 10 Samsung affiliates on charges including unfair trading and market manipulation under the Capital Markets Act, and breach of duty. The first hearing related to the Samsung Group merger and accounting fraud allegations was originally scheduled for the 25th of last month but was postponed for about a month due to Lee’s hospitalization for acute appendicitis.

Lee appeared in court wearing a black suit without a tie and a mask, looking thinner than before. It is known that he lost about 7 to 8 kg during his hospitalization. After greeting his legal team, he calmly faced the trial. As Lee appeared in public for the first time in a while, the media’s interest was intense, and the courtroom was filled with general audience members as well. An invisible tension flowed between the prosecution and defense sitting opposite each other.

Right after the trial began, when the judge confirmed the defendant’s presence and called his name, Lee stood up and replied, "Yes." When the judge asked, "Is your occupation Vice Chairman of Samsung Electronics Co., Ltd.?" he again answered, "Yes." When asked if he wanted a jury trial, he said, "No."

Lee’s defense attorney said before the prosecution began explaining the charges in detail, "I would like to speak on behalf of the defendant. The court also took into account the defendant’s urgent situation and postponed the trial date," adding, "Thanks to that, the defendant has overcome the critical condition and is recovering." He continued, "We also thank the prosecutor and will ensure the trial proceeds smoothly."

That morning, the prosecution presented a PowerPoint (PPT) outlining the charges against the defendants. The prosecution alleges that in 2015, when the Future Strategy Office pushed for the merger of Samsung C&T and Cheil Industries to secure Lee’s succession of management rights, they illegally intervened by spreading false information to inflate Cheil Industries’ stock price and lower Samsung C&T’s stock price.

The prosecution stated, "There were claims from the defense that the prosecution is mistaken and that the charges are misleading, so we will explain the purpose of the indictment clearly to avoid any misunderstanding by the court," and proceeded to explain the gist of the charges. The prosecution emphasized, "The defense claims that the prosecution assumes the merger’s purpose of succession and strengthening control is illegal or improper, but we are focusing on the false information provision and withholding of investment information during the merger process to achieve the succession goal."

They added, "Lee’s side argues that the merger purpose was not hidden and that the strengthening of control through the merger was publicly disclosed and known to all, but the problem is not the increase in Lee Jae-yong’s shareholding but the pretense that the merger was for business necessity." They continued, "In reality, the defendants chose a timing favorable to Lee for his private benefit, disregarding business effects. Publicly, they claimed it was for business necessity, that Samsung C&T and Cheil Industries decided independently, chose a timing favorable to shareholders, and deceived investors into believing massive synergy would occur to complete the merger."

In the afternoon, the defense’s arguments are scheduled to continue. Lee’s side maintains that no illegal acts occurred during the merger process and that the merger was a legitimate business activity carried out for managerial necessity.