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Court rulings

Samsung heir sentenced to 2.5 years in jail for bribery

By Jan 18, 2021 (Gmt+09:00)

3 Min read

Samsung Electronics heir Jay Y. Lee 
Samsung Electronics heir Jay Y. Lee 

Samsung Electronics Co. Vice Chairman and de-facto leader Jay Y. Lee was on Jan. 18 sentenced to two and a half years in prison on bribery and embezzlement charges, which involved the impeachment of former president Park Geun-hye in 2017. The ruling was issued by the Seoul High Court, which the Supreme Court sent the case back to in 2019.

Following the high court's ruling, Lee was immediately taken to the Seoul Detention Center. He will likely serve one and a half more years in prison as he already served a year between 2017 and 2018.

The verdict came after the Supreme Court last week upheld the 20-year prison sentence of former president Park over the corruption scandal. She has been serving her sentence since 2017.

In 2016, Samsung heir Lee became embroiled in the South Korean political scandal, in which he allegedly offered bribes to former president Park and her confidante Choi Soon-sil to gain government support for his succession. 

The case was taken to court, and in February 2017, Lee was sentenced to a year in prison until being released on probation in 2018.

In the first trial, Lee received a five-year sentence for offering a total of 8.9 billion won ($8.1 million) in bribes, including fees used for Choi's daughter's equestrian training and her family-run sports foundation.

However, a considerable amount of the alleged sum was exempted from the bribery charges in the appeal case and reduced to 3.6 billion won, which lessened Lee's sentence to two and a half years with a four-year suspended sentence.

The Supreme Court sent the case back to the Seoul High Court in 2019, ruling that the bribe amount should stand at 8.6 billion won, including the money used for Choi and her family.

The special prosecutors requested a nine-year sentence, arguing that a tough stance should be taken on corruption, considering Samsung's position as the wealthiest and most influential company in the country.

During his probation, Lee has made various efforts to demonstrate his will for reform, such as setting up a compliance committee at Samsung to show his commitment to fair and transparent management. He also said that he would put an end to the long-held practice of corporate succession at the company.

At the final hearing in December last year, Lee accepted responsibility for his past errors and pledged to reform Samsung into a top-level ethical and transparent company.

ABSENCE MAY DELAY SAMSUNG DEALS

With Lee's jail stay, Samsung faces a leadership gap for the second time in three years. This could delay big deals that the de facto leader has been working on, considering that major investments and M&A deals came to a halt for about a year during Lee's first detainment.

Samsung Electronics’ $8 billion acquisition of US electronics systems maker Harman in 2016 was the last deal in the billions-of-dollars range carried out by the company.

Earlier planned investment into core businesses, including memory chips and smartphones, continued as scheduled, but the company was unable to delve into any new businesses, according to Samsung officials.

Some Samsung executives expressed frustration and concerns in the absence of leadership. In 2017, six months after Lee was confined, Yoon Boo-keun, then-president of consumer electronics at Samsung Electronics, said, “If Samsung is considered to be a fleet of ships working together, I’m merely a captain of one of the ships. The fleet commander is on leave, which makes it difficult to reshuffle future investments and businesses."

Samsung is currently up against companies such as Apple, Google, TSMC and Sony in the race for global leadership in various markets. The management environment is also rapidly changing due to the development of artificial intelligence, big data and the Internet of things, raising views that Samsung may be delayed in preparing for the future.

For the time being, there is unlikely to be much progression in businesses such as system chips, bio and 5G, which Lee had personally tended to, including the Semiconductor Vision 2030, under which Lee announced plans to invest 133 trillion won in semiconductor operations and hire 15,000 employees.

Write to Jeong-soo Hwang at hjs@hankyung.com
Danbee Lee edited this article.
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