The heir to the Samsung business empire, Lee Jae-Yong has been sentenced to five years in prison for bribery and other offences in connection with the
The heir to the Samsung business empire, Lee Jae-Yong has been sentenced to five years in prison for bribery and other offences in connection with the scandal that brought down South Korean president, Park Geun-Hye. The penalty for Lee Jae-Yong could leave the giant firm rudderless for years and hamper its ability to make key investment decisions.
The 49 year old was found guilty of bribery, embezzlement, perjury and other charges centred on payments and promises by Samsung totalling 43.3 billion won (around $40 million) to Park’s secret confidante, Choi Soon-Sil. The court found the money was in return for policy favours including government support and hereditary succession at the group for Lee Jae-Yong after his father was left bedridden by a heart attack in 2014.
The defence had denied the charges, saying Samsung was pressured by Park to make the donations under duress and that Lee was not aware of them and did not approve them. Four other top Samsung executives were also convicted and received sentences of up to four years. Lee’s lawyers said he would appeal.
Park’s own trial began in the same room in May, and it also saw Lee’s father Lee Kun-Hee convicted of tax and other offences in 2008, receiving a suspended sentence. The verdict could add impetus to new President, Moon Jae-In’s campaign pledges to reform the chaebols. The firms have long had murky connections with political authorities in South Korea, and past trials of their leaders have often ended with light or suspended sentences, with courts citing their contributions to the economy.
The Lee clan directly owns about five percent of Samsung Electronics shares but maintains its grip on the wider group through a byzantine web of cross-ownership stakes involving dozens of companies. Lee has been Samsung’s de facto leader since his father fell ill, but his lawyers and ex-members of the former elite Future Strategy Office (FSO), which dictated the vast group’s overall direction and major business decisions, sought to portray him as naive and inexperienced.
However, Samsung appears to have been unaffected by Lee’s absence so far since his detention in February, with flagship subsidiary Samsung Electronics making record profits on the back of strong demand for its memory chips. But Chung Sun-Sup, the head of corporate analysis firm chaebul.com, said major chaebol decisions on large-scale acquisitions or investments are often endorsed by the patriarch of a ruling family, and with Lee Jae-Yong in prison, the firm may move more slowly than before. Its shares have soared in recent months but were down 1.05 percent on Friday afternoon after the verdict.
