South Korean prosecutors have sought a five-year prison sentence for Samsung Electronics CEO Jay Y. Lee. They accuse him of wrongdoing in the 2015 merger of two Samsung subsidiaries, through which he strengthened his control over the group. The development follows Lee’s acquittal of stock price manipulation and accounting fraud charges by the Seoul District Court. The prosecutor’s office appealed the verdict.
The merger in question involved Samsung C&T and Cheil Industries. Prosecutors accuse Lee and former executives of orchestrating the takeover to the detriment of minority shareholders.
They argue that the agreement focuses on strengthening Lee’s power as Samsung’s de facto boss, ignoring the interests of shareholders.
In their closing arguments, prosecutors stressed that the case sets an important precedent for South Korea’s future corporate governance, particularly for family-run conglomerates known as chaebol.
The CEO of Samsung, who has faced a series of lawsuits and prison sentences over the past decade, denied wrongdoing on appeal.
In his closing arguments, he acknowledged the problems surrounding Samsung’s future, citing challenges including declining profits, a falling stock price and increased competition in the global technology market.
Lee asked the court for leniency, promising to lead Samsung through the current crisis and promising innovation to secure the company’s position in the global market. Recently, Samsung has struggled to maintain its position in areas such as memory chip and smartphone manufacturing. Rivals such as SK Hynix and TSMC are overtaking Samsung in seizing new growth opportunities, especially in the fast-growing AI chip market.
The company is once again facing pressure from a changing global trade environment, including U.S. tariffs based on new economic policies.
The appeals court ruling, expected early next year, could have a major impact on Lee’s leadership of Samsung and the Korean corporate governance field.
If the court upholds Lee’s acquittal, he may be able to run the company with fewer legal restrictions. However, prosecutors could send the case to the Supreme Court, prolonging uncertainty for Samsung at a critical time for its business development. The incident represents South Korea’s slow but effective strategy to reform its corporate sector and will reportedly have implications for the country’s technology sector and South Korea’s standing in the global market.
