Samsung Heir Lee Jae-yong Freed From Prison by Appeals Court

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SEOUL—After almost a year behind bars, Lee Jae-yong, the de facto head of Samsung, walked free Monday after an appeals court reduced his sentence in a corruption scandal that ensnared the country’s former president.

The Seoul High Court upheld four of the five convictions against Mr. Lee, but replaced a five-year jail term with a suspended prison sentence of two years and six months. The scion of the Samsung empire wore a white shirt and dark suit as he left the detention center where he had been held, hours after the ruling.
“I apologize for not showing my best self,” he told reporters.

Mr. Lee can now return to the company that has suffered a leadership vacuum since his detention a year ago despite a record run of profits.

The vice chairman of Samsung Electronics Co. was first taken into custody last February, after prosecutors accused him of receiving government favors in return for financial contributions to former president Park Geun-hye’s close confidante Choi Soon-sil.

The High Court judges quashed one of Mr. Lee’s convictions—hiding assets overseas—and lessened the extent of wrongdoing in some of the other counts of which he remained guilty. The court ruled that the bribes paid amounted to about 3.6 billion South Korean won ($3.3 million), below the $8.2 million found by a lower court in August last year.

The court also said that Samsung’s contributions were made as a result of coercion by Ms. Park, who is undergoing a lower court trial and has previously denied wrongdoing. Her lawyers weren’t immediately available for comment.

Public anger over the corruption scandal contributed to Ms. Park’s ouster as president last March. In May, the left-leaning Moon Jae-in was elected as president after campaigning on loosening the ties between government and Korea’s large family-run conglomerates, or chaebols.

Mr. Lee was the highest-profile business head to be prosecuted. His jailing was seen by many in South Korea as a watershed moment in long-running efforts to end corruption in the country’s corporate culture.

Mr. Lee’s release comes just days before the opening of the 2018 Pyeongchang Winter Olympic Games, of which Samsung is a top-tier sponsor.

An attorney for Mr. Lee said an appeal would be made to the Supreme Court, the nation’s highest judicial body, seeking to prove his innocence on the remaining charges. Prosecutors, who had sought a 12-year sentence, weren’t immediately available for comment on whether they would appeal the latest decision.

Mr. Lee’s release will calm the waters at South Korea’s biggest business empire, which is controlled by the Lee family through an intricate structure of cross-shareholdings. The network allows the family to exercise control over Samsung’s key affiliates—mainly crown jewel Samsung Electronics Co.—with limited stakes. Mr. Lee has acted as Samsung’s de facto leader since its chairman, his father, became incapacitated after a heart attack in 2014.

Samsung has previously said that it paid about $38 million to entities it later found out were linked to Ms. Park’s confidante, Ms. Choi, but denied that the funds were given in return for favors.

Prosecutors argued Ms. Choi colluded with Ms. Park to give government backing on deals, most importantly a merger between two affiliates in 2015, in order to help Mr. Lee consolidate his grip over Samsung Electronics.

Samsung Electronics, the world’s largest smartphone maker based on annual shipments, has made sweeping changes to its top leadership during Mr. Lee’s absence, replacing all its business division heads with relatively younger leaders and separating the role of its CEO and board chairman for the first time.

Before stepping down in October of last year, Samsung’s former CEO Kwon Oh-hyun said Samsung is “hard-pressed to find new growth areas,” and described the new leaders as those “well suited to accelerate the pace of innovation.”

The company has posted three consecutive quarters of record profits fueled by robust demand for its memory chips. Most recently, it recorded an operating profit of $14 billion for the three months ended Dec. 31, 2017.