Samsung Bound by Judicial Shackles... Growing Concerns Over the 'Lost Decade'

[Image source=Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] As the global semiconductor leading companies' power struggle has intensified this year, Samsung Electronics remains the only one unable to secure a competitive edge, trapped in judicial constraints for years. Vice Chairman Lee Jae-yong of Samsung Electronics was sentenced to prison and detained in January in the retrial of the 'state affairs manipulation' case. Additionally, ongoing trials regarding the alleged unfair merger and accounting fraud of Samsung C&T, as well as suspicions of habitual propofol abuse, have created judicial risks that are hindering major management decisions such as investments.

On the 22nd, the Seoul Central District Court Criminal Division 25-2 (Presiding Judge Park Jeong-je) held the first trial for Vice Chairman Lee and 10 Samsung affiliates charged with violations including unfair trading practices and market manipulation under the Capital Markets Act, and breach of duty. The prosecution alleged that the 2015 merger between Samsung C&T and Cheil Industries was intended to secure Lee's succession of management rights and strengthen control. The defense argued that the merger was a business decision made with consideration of shareholders' interests.

During the trial, sharp exchanges took place. When the prosecution pointed out that the defense submitted reference materials without following evidence application procedures, the defense countered that many of the statements presented by the prosecution were not included in the indictment. Particularly, the two sides clashed for about an hour over witness examination and evidence disclosure issues, which are scheduled for the next trial session starting on the 6th of next month, indicating a fierce legal battle ahead.

Legal circles expect this trial to take considerable time due to its complexity, compared to the state affairs manipulation case which took over four years to conclude. Furthermore, Vice Chairman Lee is facing potential additional indictments related to illegal propofol use. In the business community, the prolonged judicial risks facing Samsung are often described as a 'lost decade.'

Calls for a pardon for Vice Chairman Lee are gaining momentum. Five economic organizations, including the Korea Employers Federation, plan to formally request the government for Lee's pardon next week. Earlier, Korea Employers Federation Chairman Sohn Kyung-shik initiated discussions on the pardon during meetings with the Deputy Prime Minister and heads of economic organizations. Although Park Beom-gye, Minister of Justice and the relevant authority, has denied considering pardon or parole, support for a pardon is growing among the business sector, religious groups, and political circles. Vice Chairman Lee was detained in court on January 18 and will mark 100 days in custody on the 27th of this month.

An industry insider said, "There are limits to Vice Chairman Lee making decisions while detained," adding, "Without at least a conditional pardon, the geopolitical semiconductor crisis is bound to continue."