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Court upholds not guilty verdict in Samsung case

Mon, 06/01/2009 - 9:05am
The Associated Press

SEOUL, South Korea (AP) – South Korea's Supreme Court on Friday upheld a lower court ruling that acquitted the former chairman of Samsung Electronics on breach of trust charges and threw out guilty verdicts in a related case.

The top court said that ex-Samsung chief Lee Kun-hee was not guilty, reiterating a judgment made by the Seoul High Court last year. The charges had stemmed from long-standing allegations of dubious financial transactions in the larger Samsung Group conglomerate.

Samsung has been engulfed in legal uncertainty in recent years, and the decisions are likely to help remove some of that burden. Samsung Electronics Co., the group's flagship corporation, has been without a chairman since Lee stepped down last year after being indicted on tax evasion and breach of trust charges.

Samsung Group comprises dozens of companies. Besides electronics, it has interests in shipbuilding, construction, insurance and leisure. Its companies account for a big slice of South Korea's exports.

The Supreme Court also threw out convictions for two Samsung executives who had been found guilty of selling convertible bonds in a Samsung unit to Lee's children at prices less-than-market value. The court said that it could not find that the executives had violated breach of trust laws in the case and sent it back to the Seoul High Court for reconsideration.

The executives were both former heads of Samsung Everland, an amusement park operator seen as a defacto holding company for the conglomerate. Both are no longer with the conglomerate, according to spokesman Reuben Staines, who also said Samsung had no comment on the top court rulings.

Critics have claimed the convertible bond sale was arranged to enable the elder Lee to hand the Samsung reins to his son, Lee Jae-yong, who is an executive at Samsung Electronics. Civic groups have dogged the conglomerate for years, claiming its opaque ownership structure based on cross-shareholdings by group companies led to abuses and was meant to ensure the Lee family maintains control.

The elder Lee, who led Samsung for 20 years following the death of his father, the conglomerate's founder, was convicted last year on the tax evasion charges and given a suspended prison term. That conviction was later upheld by the Seoul High Court.

Lee, 67, is a South Korean corporate icon who has personified Samsung. He is widely credited with turning Samsung Electronics into a global brand.

He was indicted in April last year following a probe by special prosecutors into allegations of wrongdoing aired by a former Samsung lawyer.

Shares in Samsung Electronics declined 0.2 percent to close at 558,000 won ($442). The court decisions were announced before the stock market closed.

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