Samsung chair acquitted in stock manipulation and fraud case

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Good morning. We start today in South Korea, where Samsung chair Lee Jae-yong was acquitted of stock manipulation and accounting fraud charges in connection with a controversial merger almost a decade ago.

The Seoul Central District Court ruled yesterday that prosecutors had failed to prove a 2015 merger between two Samsung subsidiaries was conducted in order to secure Lee’s control of the conglomerate. Lee, the grandson of Samsung founder Lee Byung-chul, has long maintained that the merger was “normal business activity”.

The ruling was welcomed by the Korea Chamber of Commerce and Industry but strongly criticised by Korean advocates of improved corporate governance, for whom the merger remained an example of minority shareholders losing out to the controlling families of conglomerates.

“The ruling will free Lee of legal risks, but I am at a loss for words in terms of the country’s economic justice,” said Park Ju-geun, head of corporate research group Leaders Index. “This goes totally against all previous court rulings on the merger.” Here’s more on the surprising verdict.

And here’s what I’m keeping tabs on today:

• Monetary policy: The Reserve Bank of Australia announces its interest rate decision.

• Economic data: The EU releases December retail sales figures while January factory orders data is due from Germany.

• Companies: BP, Mitsubishi, Nintendo, Snap, Spotify, Toyota and UBS are among those reporting results.

Five more top stories

1. Chinese-Australian writer Yang Hengjun has been handed a suspended death sentence in China five years after being detained on espionage charges. Australia’s foreign minister said the government was “appalled” by the decision and summoned the Chinese ambassador in Canberra to express its concerns. Here’s what the sentence could mean for Australian-Chinese relations.

2. The US will restrict visas for abusers of commercial spyware, including those selling the encryption-busting malware. The visa ban is the latest move by the Biden administration to rein in a sprawling, multibillion-dollar industry that has been tied to the repression of dissidents around the world.

• US base attacked: A drone attack on a military base housing US troops in Syria has killed at least six allied Syrian fighters, the first major attack since Washington launched retaliatory strikes against Iran-aligned militias accused of targeting its forces in the region.

3. Novo Nordisk has agreed to acquire three manufacturing sites for $11bn, as the Danish drugmaker races to expand production of the weight loss drugs whose runaway success has sent the company’s valuation beyond $500bn. The group last week reported record sales for 2023, but warned that supply chain bottlenecks were hampering its ability to meet the surging demand for its anti-obesity drugs Ozempic and Wegovy.

4. Pakistan’s leading political dynasties are poised to retake control of the government in elections this week after authorities crushed the party of jailed ex-prime minister Imran Khan, sparking some of the worst turmoil in the country’s recent history. Analysts warned that the pre-election manoeuvring amounted to some of the most overt manipulation of Pakistan’s politics by the army in years. Read our preview of Thursday’s election.

5. Hong Kong’s government expressed its “extreme disappointment” after Argentine football star Lionel Messi angered fans by sitting out a long-anticipated exhibition match in the Chinese territory. Many of the more than 38,000 people who attended Sunday’s game between Inter Miami and Hong Kong XI chanted, “Refund! Refund!”, after Messi stayed on the bench. Hong Kong’s government had pinned its hopes on the event to help boost the territory’s appeal.

The Big Read

From noodle joints to pharmacies, Micro Connect has financed more than 10,000 small stores in 270 cities across China in return for a fixed percentage of their revenue every day. In the process, the new enterprise has built up a wealth of real-time, unfiltered data on how Chinese consumers are spending their money, drawing praise from economists sceptical of official statistics. As well as being a gold mine for data, the company has turned those streams of repayments into tradable financial instruments — but critics say the risks are high.

We’re also reading . . . 

• War in Ukraine: At Donald Trump’s behest, Republicans in Congress are blocking US military aid for Ukraine. The consequences could be disastrous, writes Gideon Rachman.

• Delaware vs Musk: The billionaire’s threat to move Tesla’s legal home has revived debate over the dominance of the small, mid-Atlantic state and its courts over corporate America.

• Private equity: The industry has evolved in the past three decades and cannot be caricatured homogenously as short-termist, debt-addicted asset-strippers, writes Patrick Jenkins.

Chart of the day

A rapid fall in US inflation has opened the way for interest rate cuts within months, the OECD said in its interim outlook, but it warned that Britain would suffer from the G7’s fastest price growth. Meanwhile, the OECD left its outlook for Chinese growth unchanged, forecasting an expansion of 4.7 per cent this year and 4.2 per cent in 2025.

Take a break from the news

What makes Elton John tick? An upcoming auction of watches worn by the Rocket Man opens a portal into his passions.

Additional reporting by Tee Zhuo and Gordon Smith