July 24, 2021

Lee Jae-yong, heir to the Samsung empire, sentenced to five years in prison

Lee Jae-yong was sentenced on Friday, August 25, to five years in prison. The vice-president of Samsung Electronics, heir to the empire created by his grandfather, Lee Byung-chul (1910-1987), whose activity is equivalent to 23% of South Korea’s gross domestic product (GDP), will remain in detention. He has been there since his indictment in February.

In early August, the court responsible for this “trial of the century” as it is called in South Korea, had requested twelve years in prison against Lee Jae-yong, who allegedly pledged or paid 43 billion won (32.3 million won). euros) to two foundations headed by Choi Soon-sil. The latter is an ex-confidante of President Park Geun-hye (2013-2017), at the origin of the “Choigate”, a scandal which led to the dismissal of Mr.me Park, and whose ramifications involve most of the chaebols, South Korean conglomerates. In return, the government supported the 2015 merger of Samsung C & T and Cheil Industries. The operation was to facilitate the succession at the head of the group, for the benefit of Lee Jae-yong.

Mr. Lee admitted that Samsung gifted a horse worth one billion won to Mr.me Choi, Chung Yoo-ra, who wanted to compete in the dressage event at the 2020 Tokyo Olympics.

Throughout the trial, Mr. Lee, the third fortune of his country, estimated by the American magazine Forbes at $ 7 billion (5.9 billion euros), defended himself from any embezzlement, going so far as to invoke his ignorance of a group that he nevertheless joined in 1991 and in which he occupied various posts. “I did not have sufficient knowledge or skill to make decisions”, he told the judges.

A very critical public opinion of the chaebols

Read also South Korea: Samsung heir indicted for corruption

Responsibility for the decisions would lie with Choi Gee-sung, a powerful leader of the former Office of Future Strategy (FSO), who testified that he did not tell Mr. Lee about the shenanigans with Choi Soon-sil, “To protect him”.

Dissolved in February, the FSO, which brought together some 200 executives from some 60 subsidiaries of the group, served as the “control tower” of the chaebol, and would have assumed the most obscure activities of the group. The two historic leaders of this institution, Choi Gee-sung and Chang Choon-ki, have resigned and are also being prosecuted. In an August 9 article, the South Korean magazine Remaining-in revealed the SMS exchanges between Chang Choon-ki and the National Intelligence Service. The South Korean intelligence service reportedly informed him in real time of the progress of discussions on the proposed merger between Cheil and Samsung C&T.

The verdict delivered delights a very critical opinion of the chaebols since the “Choigate” and which elected, on May 9, President Moon Jae-in on the promise of a moralization of the practices of the conglomerates.

Still solid performance

To replace Mr. Lee, the promotion of his sister, Lee Boo-jin, who heads the hotel and distribution group Shilla, has been mentioned. But her lack of knowledge of the electronics industry would penalize her. Several executives, such as Kwon Oh-hyun, in charge of the thriving semiconductor division, Shin Jong-kyun, who deals with mobile products, and Yoon Boo-keun, at the head of household appliances, could take on more responsibilities. .

Uncertainties could, however, believes Chung Sun-sup, head of the conglomerate monitoring site Chaebul.com, “Slow down the decision-making process on massive and daring investments which have made the group’s current success”. When Lee Kun-hee, the father of Lee Jae-yong, found himself in the midst of a corruption scandal in 2008, he left his post, assumed, after him, by his followers.

Other chaebols have experienced similar situations without being particularly affected, such as SK, whose president Chey Tae-won was sentenced to four years in prison in 2013. This has not affected the group’s activities. The same goes for Hyundai, whose president Chung Mong-koo was convicted in 2006.

So far, Samsung is showing solid performance. Its latest results, released on July 27, show sales of 20 percent to 61 trillion won and 89 percent net profit to 11 trillion won between April and June. Sales of the Note 8 tablet, unveiled on August 23 and which should make people forget the failure in 2016 of the Note 7, withdrawn from sale due to malfunctions, look promising.