'Judicial Risk Practically Resolved'... Chairman Lee Jae-yong's Return as Registered Executive and Future Moves in Focus

All 19 Charges Acquitted Again in Second Trial
Judicial Risks Nearly Resolved, Final Hurdle Cleared
Lee Expected to Accelerate Management Activities
Possible Meeting with Visiting OpenAI CEO Sam Altman
Business Community Watching Lee's Potential Return as Registered Executive

On the 3rd, Samsung Electronics Chairman Lee Jae-yong was acquitted again in the second trial on charges of 'unfair merger between Samsung C&T and Cheil Industries' and 'accounting fraud at Samsung Biologics,' effectively resolving the legal risks surrounding him. As a result, he can now accelerate his management activities. In particular, the business community is focusing on the stabilization of management, including Chairman Lee's return as a registered executive.

Samsung Electronics Chairman Lee Jae-yong, who is on trial for unfair merger and accounting fraud charges related to succession of management rights, is attending the appellate court sentencing hearing held at the Seoul High Court in Seocho-gu, Seoul on the 3rd. Photo by Kang Jin-hyung

At 2 p.m. that day, Chairman Lee was acquitted of all 19 charges in the second trial sentencing hearing of the 'unfair merger and accounting fraud' case held by the Seoul High Court Criminal Division 13 (Presiding Judge Baek Gang-jin, Judges Kim Sun-hee and Lee In-soo), just as in the first trial. With this, Chairman Lee has passed the critical point in resolving the last 'judicial risk.' Although the case is likely to proceed to the Supreme Court due to the prosecution's appeal, the legal community's consensus is that the Supreme Court will likely reach the same verdict since both the first and second trials resulted in acquittals.

Now, all eyes are on where Chairman Lee's steps will head immediately after the verdict on the 4th. Previously, after being acquitted in the first trial on February 5 last year, he left the country through Gimpo Airport the next day to inspect the status of companies operating in the Middle East and Southeast Asia and the local markets.

Currently, the most likely scenario is a meeting with Sam Altman, founder and CEO of OpenAI. According to related industries, CEO Altman will visit South Korea on the 4th and hold a private workshop called 'Builder Lab' at the Seoul Plaza Hotel for 100 domestic company and startup developers. It is reported that at this event or in subsequent schedules, CEO Altman will meet with Chairman Lee and other senior executives of Samsung Electronics to discuss cooperation plans.

OpenAI, led by Altman, is in urgent need of a strategy to counter the AI platform 'DeepSeek R1' of the recently emerged Chinese AI startup 'DeepSeek.' Accordingly, Altman is expected to share various ideas with Chairman Lee regarding AI platform development and construction. Inspections of domestic and overseas business sites are anticipated to take place afterward.

Some are paying attention to whether Chairman Lee will strengthen responsible management by returning as a registered executive for the first time in five years and take a more prominent role in the group's business. Individuals not registered as executives cannot participate in the board of directors, the company's legal decision-making body, nor be appointed through the shareholders' meeting, which is considered somewhat distant from responsible management. Chairman Lee has not returned to the registered executive position for six years since stepping down in 2019. It is reported that the aftermath of judicial risks starting from the National Pension Service scandal and continuing through the 'unfair merger and accounting fraud' case, along with the resulting cold public opinion, had a significant impact.

However, as the semiconductor business and others have recently posted poor performance, casting a shadow of crisis over group management, the necessity of Chairman Lee's return as a registered executive has been continuously raised both inside and outside the company. The Samsung Compliance Committee emphasized in its '2023 Annual Report' published in October last year that, along with rebuilding the control tower, "innovative governance improvements must be made through the CEO's return as a registered executive to practice responsible management." The Korea Corporate Governance Forum also commented that although Chairman Lee is not a registered executive, he "(makes major decisions but) does not bear responsibility for recent management failures."

Meanwhile, immediately after the court's verdict, Chairman Lee did not respond to reporters' questions and left by car. Lee's legal team, including attorney Kim Yoo-jin of Kim & Chang, said, "We hope that with this ruling, the defendants can now focus on their original duties."