[Invest&Law] Samsung Group Appoints Kim & Chang for National Pension Service Civil Lawsuit

National Pension Service, Samsung C&T, and Others File Counterclaim for Damages
Four Kim & Chang Lawyers Represent Samsung Group and Others
Some Lawyers Also Handle Appeals in Related Criminal Trials

The National Pension Service is continuing preparations for a damages claim lawsuit filed demanding compensation for losses caused by the merger of Samsung C&T and Cheil Industries, with key figures including Samsung Electronics Chairman Lee Jae-yong appointing lawyers from major law firms as their representatives.

According to the legal community on the 7th, in the damages claim lawsuit filed by the National Pension Service against Chairman Lee, Samsung Group executives, and Samsung C&T as a corporation?totaling nine defendants?Chairman Lee, former Samsung Group Future Strategy Office head Choi Ji-sung, and former Future Strategy Office deputy chief Jang Chung-gi recently appointed four lawyers from Kim & Chang law firm as their representatives. They have been officially retained.

'Former Judges' and 'Criminal Trial Participants' Among Many Lawyers Appointed

Notably, among the legal team, lawyers Kim Hyun-bo (Judicial Research and Training Institute class 27) and Jang Jong-cheol (class 33) are also representing Chairman Lee in the criminal appeal trial concerning the 'unfair merger of Samsung C&T and Cheil Industries.' Both lawyers are former judges who secured a 'not guilty' verdict for Chairman Lee in the first trial of the criminal case. Lawyer Jeong Seong-eon (class 37) was also part of the defense team for Chairman Lee, former head Choi, and former deputy chief Jang in the first criminal trial.

Former Samsung C&T presidents Kim Shin, Lee Young-ho, Choi Chi-hoon, and four other Samsung-related defendants, including Samsung C&T as a corporation, appointed six lawyers from the law firm HwaWoo as their representatives. Among them, lawyers Yoo Seung-ryong (class 22), Jo Geon-ju (class 25), Woo Soo-yeon (class 35), and Shin Jun-hwan (class 41) served as defense counsel in the criminal trial for former presidents Kim Shin, Lee Young-ho, and Choi Chi-hoon. These Samsung-related defendants were also all acquitted in the first trial.

On the other hand, the National Pension Service's legal representation is handled by Hannuri law firm, which has achieved several successes in governance-related disputes and class actions. Four lawyers, including lead attorney Kim Ju-young (class 18), are participating. Former Minister of Health and Welfare Moon Hyung-pyo and former head of the National Pension Fund Management Hong Wan-seon are also named as defendants, but their legal representatives have not yet submitted retention notices to the court. The damages claim lawsuit will be heard by the Civil Division 31 of the Seoul Central District Court (Presiding Judge Kim Sang-woo). Although no trial dates have been set, the schedule for arguments is expected to be finalized after the regular judicial personnel reshuffle next month.

Earlier, the National Pension Service filed the lawsuit on September 13 last year, just before the expiration of the 10-year statute of limitations for the damages claim. Based on the shareholders' meeting that decided the merger of Cheil Industries and Samsung C&T (July 2015), the statute of limitations expired in July last year. The amount claimed in the complaint is 510 million KRW, but if the actual damages are specifically calculated, the claim amount could increase to several hundred billion KRW.

All Samsung-related defendants acquitted in first criminal trial... Second trial verdict expected next month

The criminal trial for Chairman Lee and others, indicted on charges of unfair merger, is scheduled for an appellate verdict on the 3rd of next month. The prosecution alleges that "during the 2015 merger of Cheil Industries and Samsung C&T, Chairman Lee intentionally inflated the stock price of Cheil Industries, where he was the largest shareholder, and suppressed the stock price of Samsung C&T, which he did not hold shares in," and indicted Chairman Lee and others in September 2020. At the time of the merger, the National Pension Service held 11.61% and 5.04% stakes in Samsung C&T and Cheil Industries respectively, but the value of shares in the merged Samsung C&T was found to have shrunk compared to the combined value of the two companies' shares.

However, the first trial acquitted all Samsung-related defendants, including Chairman Lee, on the grounds that "the merger was a legitimate business activity driven by managerial necessity." It was also ruled that there was insufficient evidence to consider the purpose, process, ratio, and timing of the merger as unfair. The prosecution appealed this decision and, in the recent appellate trial's closing arguments, requested the court to sentence Chairman Lee to five years in prison and impose a fine of 500 million KRW, as in the first trial.

Meanwhile, former Minister Moon, who was separately indicted, was sentenced to two years and six months in prison after being found guilty of pressuring the investment committee to approve the merger plan through former head Hong before the Samsung C&T merger shareholders' meeting. Former head Hong was also sentenced to two years and six months in prison for charges including pressuring committee members, which caused significant losses to the National Pension Service.