Posted October. 20, 2017 07:56,
Updated October. 20, 2017 08:55
A Seoul court on Thursday backed the controversial merger between two Samsung Group units -- Samsung C&T Corp. and Cheil Industries Inc. The court dismissed a lawsuit by Ilsung Pharmaceutical Co., a former major shareholder of Samsung C&T, seeking an invalidation of the merger. "One cannot conclude that the merger ratio was unfavorable to former Samsung C&T shareholders,” the court said. “Even if the ratio was unfavorable to some shareholders to a certain degree, it cannot be said that it was outstandingly unfair.”
The ruling on the civil lawsuit case does not directly influence a separate criminal trial involving former President Park Geun-hye’s illegal intervention in the merger. However, Park Young-soo, the special prosecutor who investigated Park’s wrongdoings, has indicted those involved in the merger, claiming that the former president put pressure on the National Pension Service to support the “unfair” merger through senior government officials including former Health and Welfare Minister Moon Hyung-pyo at the request by Lee Jae-yong, vice chairman of the Samsung Electronics Co. The special prosecutor’s case is based on the premise that the merger was unfair, which was denied by the court.
“Even if the merger was part of a comprehensive plan to solidify Lee’s control over Samsung Group, the reinforcement of a certain person’s control is not an act banned by the law. Therefore it cannot be said that the merger’s purpose is inappropriate just because it entailed enhanced control,” the court said. It did not directly deliberate on the issues being dealt with by a criminal court regarding whether the merger was part of a scheme to facilitate Lee's succession of the group from his father and to strengthen his grip on the conglomerate. In the form of an assumption, however, the court made it clear that the purpose of the merger could not be seen as unfair.
Former Health and Welfare Minister Moon was found guilty of having put pressure on the state pension fund. The denial of the merger’s unfairness does not rid him of the wrongdoing, the reproachability is significantly reduced. The Samsung vice chairman was also found guilty of making comprehensive tacit request for favors in the overall succession process including the merger, which was a core part of the succession scheme claimed by the special prosecutor. The latest court ruling makes us question why Lee would bribe officials for favors in a merger that was not unfair in the first place. An appeals court should make a more discreet judgment.