In the appeal trial of Samsung Electronics Chairman Lee Jae-yong's case involving allegations of unfair merger and accounting fraud, the prosecution and Lee's defense engaged in a dispute.
The Seoul High Court Criminal Division 13 (Presiding Judges Baek Gang-jin, Kim Seon-hee, and Lee In-su) held a hearing on the 28th to examine the background and purpose of the 2015 merger between Samsung C&T and Cheil Industries, among other issues.
The prosecution argued, "Although the merger was carried out for Chairman Lee's succession purposes, that fact was concealed, and it was disguised as if the business necessity of Samsung C&T was the objective."
They further stated that the merger was conducted under conditions clearly unfavorable to Samsung C&T. The prosecution emphasized, "It has been empirically confirmed through research that when merger scenarios within a corporate group spread, the stock price of companies related to the controlling shareholder rises, while the stock price of the counterpart company falls. The merger took place in a situation where Cheil Industries had taken value from Samsung C&T and raised its stock price. The management of Samsung C&T accepting this as is constitutes clear breach of trust."
Additionally, the prosecution pointed out that documents from Anjin Accounting Corporation, which prepared the merger review report at the time, were manipulated, stating, "Anjin reversed its final conclusion in just one day under Samsung's pressure."
On the other hand, Lee's defense argued that since there was no problem with the merger between the two companies, the first trial's not guilty verdict should be upheld.
The defense attorney said, "The original trial judged that 'the merger purpose cannot be conclusively said to be only succession.' The main judgment of the original trial was that there was not only the purpose of improving governance but also business necessity, and the prosecution has failed to argue that there was no business necessity."
Regarding the claim that the merger was unfavorable to Samsung C&T, they countered that the merger was beneficial to both companies.
The defense attorney stated, "At that time, the market was positive about Cheil Industries, and the target stock price by market experts was also on an upward trend. Meanwhile, Samsung C&T had poor performance, experienced an 'earnings shock,' and was in a situation where capital erosion due to large losses was a concern."
They continued, "After the merger announcement, not only Cheil Industries but also Samsung C&T's stock prices hit the upper limit. If the market had judged that one company was subjected to an unfavorable merger, it would not be possible for both companies' stock prices to rise to the upper limit."
Earlier, Lee was indicted in September 2020 on charges of involvement in various fraudulent transactions, market manipulation, and accounting fraud orchestrated by the Future Strategy Office to stably succeed management rights at minimal cost and strengthen control during the merger process of Cheil Industries and Samsung C&T.
However, in February this year, the first trial court acquitted Lee of all 19 charges, stating that the merger of the two companies was not solely for Lee's succession or strengthening control, so it could not be considered entirely unfair, and there was no evidence to prove that the unfair ratio caused damage to shareholders.
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