Lee Jae-yong Acquitted... Listed Companies Association Welcomes "Catalyst for Economic Recovery"

Governance Forum Points Out Group Governance Issues
"Decisive Action Needed to Normalize Abnormalities"

The Korea Listed Companies Association on July 18 welcomed the Supreme Court's final acquittal of Samsung Electronics Chairman Lee Jae-yong on charges of unfair merger and accounting fraud, stating that the decision "will serve as a catalyst for economic recovery."

In a statement released that day, the association said, "In a rapidly changing global economic environment, the court's decision will eliminate uncertainties surrounding Samsung Electronics' management, paving the way for active investment and the pursuit of innovative business initiatives."

The association emphasized, "Samsung Electronics plays a pivotal role in Korea's industry, not only because of its size but also through its partnerships with numerous medium-sized and small enterprises, fostering mutual growth. This ruling marks a starting point for aligning with the new government's policy direction, which prioritizes public welfare and economic revitalization."

It added, "We hope that, based on Chairman Lee Jae-yong's creative leadership, the Samsung Group will become a driving force that opens new breakthroughs for Korea's economy."

Meanwhile, some have pointed out that the ruling does not address the fundamental governance issues within the Samsung Group. In a commentary released the same day, the Korea Corporate Governance Forum stated, "This is an era of fiduciary duty to shareholders. Corporate decisions should no longer be made for the benefit of controlling shareholders." The forum further argued, "Issues such as the application of the equity method to Samsung Fire & Marine Insurance or the accounting treatment of liabilities related to participating insurance contracts are merely peripheral disputes. The underlying reason for the ongoing conflict between societal rules and Samsung's direction is Chairman Lee Jae-yong's continued control over Samsung Electronics."

The forum also pointed out that the recent accounting controversy at Samsung Life Insurance is ultimately a result of abnormal governance within the Samsung Group. It stated, "We are in an era of fierce competition where even with focus and selection, victory is not guaranteed. Past mistakes must be swiftly addressed so we can move forward. Chairman Lee Jae-yong must make decisive choices and take action to correct the abnormal governance structure of the group, which is affecting not only domestic but also international trust."