September 4, 2017
ASIA / PACIFIC
THE ASIAN REPORTER n Page 5
South Korean court sentences Samsung heir to five years in prison
By Youkyung Lee
AP Business Writer
S
EOUL, South Korea — A South
Korean court sentenced the
billionaire chief of Samsung to five
years in prison for crimes that helped
topple the country’s president, a stunning
downfall that could freeze up decision-
making at a global electronics powerhouse
long run like a monarchy.
The Seoul Central District Court said
Lee Jae-yong, 49, was guilty of offering
bribes to Park Geun-hye when she was
South Korea’s president, and to Park’s
close friend, to get government support for
efforts to cement his control over the
Samsung empire. The revelations that led
to Lee’s arrest in February fed public
outrage which contributed to Park’s
removal.
A panel of three judges also found Lee
guilty of embezzling Samsung funds,
hiding assets overseas, concealing profit
from criminal acts, and perjury. Prosecu-
tors had sought a 12-year prison term.
The court said Lee and Samsung
executives who advised him caused “a big
negative effect” to South Korean society
and its economy.
“The essence of the case is unethical
collusion between political power and
capital,” the court said in a statement. It
led the public to fundamentally question
the public nature of the president’s work
and to have “mistrust in the morality of the
Samsung group,” it said.
The families who control South Korea’s
big conglomerates, known as chaebol, were
lionized a generation ago for helping to
turn South Korea into a manufacturing
powerhouse, but public tolerance for
double standards that put them above the
law has been rapidly diminishing.
Analysts said the verdict will not
immediately have an impact on Samsung’s
business operations, which are overseen
by three chief executives. The company
has successfully weathered past crises
that include two recalls of Galaxy Note 7
smartphones prone to catch fire and Lee’s
arrest. It is set to report its highest-ever
earnings this year.
But long-term business decisions, such
as finding future growth areas and
identifying companies for acquisitions,
may have to be put on hold.
“South Korea’s chaebol system is similar
to monarchy,” said Park Sang-in, a
professor at Seoul National University. “In
the monarchy system, you need a king.”
There is also potential for a destabilizing
family feud over inheritance when the
elder Lee dies.
“Samsung was in the middle of change
and that has stopped,” said Park Ju-gun,
chief executive at CEO Score, a private
corporate watchdog. “That is a big risk.”
Business lobby groups, while refraining
from openly criticizing the verdict,
expressed concerns that Lee’s absence
from the helm of Samsung would take a
toll on the South Korean economy.
Samsung accounts for about one fifth of
the nation’s exports.
“Samsung Electronics represents South
Korea as a global company, so we are
deeply worried about the fallout from his
long absence,” said a Korea Employers
Federation spokesman. “It will be a
disaster not just to an individual company
but to the nation’s economy.”
The verdict, however, could be good
news for shareholders at South Korean
companies who have complained about
weak corporate governance that let
founding families wield outsized influence
and enjoy emperor-like authority even
with minority ownership.
South Korean President Moon Jae-in’s
office, in a rare commentary on a court
ruling, welcomed the ruling as a step
toward rooting out corruption.
“We hope that it would pave the way to
end
persistent
government-business
collusion, which has hampered society
from moving forward,” its spokesman,
Yoon Young Chan, said.
Lee was accused of offering $38 million
in bribes to four entities controlled by Choi
Soon-sil, a longtime friend of Park, in
exchange for government help with a
merger that strengthened Lee’s control
over Samsung after his father suffered a
heart attack in 2014.
Samsung has not denied transferring
corporate funds. But Lee, vice chairman at
Samsung Electronics and the Samsung
founder’s grandson, claimed innocence
during the court hearing. He said he was
unaware of the foundations or the
donations, which were overseen by other
executives.
SAMSUNG SCANDAL. Samsung Electronics
Co. vice chairman Lee Jae-yong, right, leaves after
his verdict trial at Seoul Central District Court, in Se-
oul, South Korea. The court sentenced the billionaire
Samsung heir to five years in prison for bribery and
other crimes that fed public anger leading to the
ouster of Park Geun-hye as South Korea’s president.
(Chung Sung-Jun/Pool Photo via AP)
The closely-watched verdict is the latest
convulsion in a political scandal that
prompted millions of South Koreans to
protest last fall, culminating in the ouster
and arrest of Park as well as the arrests of
Choi and Lee. Park, who was embroiled in
a tumultuous series of scandals, was
removed from office in March. She and
Choi are both currently on trial.
Judges pointed to an unusual arrange-
ment in which Samsung bankrolled
equestrian training for Choi’s daughter as
proof of Lee’s knowledge of what was
transpiring.
They said Lee was aware that Park
wanted Samsung to sponsor the
equestrian training.
Samsung secretively provided a huge
amount of money to Choi’s Germany-based
company that paid for the training and the
exorbitantly priced foreign horses worth
3.6 billion won ($3.2 million) were part of
the bribes, the verdict said. The attempts
to hide Samsung’s involvement also
constituted crimes, it said.
In total, Samsung paid $7.9 million in
bribes to the German company and a
winter sports center, the judges said.
The verdict also dealt a blow to
Samsung’s publicly stated position that
recent business dealings or restructuring
efforts have nothing to do with the
succession of corporate leadership to Lee
from his father. Instead, Samsung has
insisted that a merger of two Samsung
companies at the center of the scandal was
about creating business benefits. Judges
rejected Samsung’s argument.
“He was set to benefit most from the
succession work, which was part of the
favors sought from the president,” Kim
Jin-dong, the head judge, said.
Other former Samsung executives
charged with Lee were also found guilty.
Choi Gee-sung, a mentor of Lee, and
Chang Choong-ki were sentenced to four
years in prison. Two other former
executives received suspended prison
terms.
The ruling in Lee’s case can be appealed
twice. Samsung will appeal the ruling
immediately, Song Woo-cheol, a Samsung
attorney, told reporters.
SPiLt ink Gallery
Acrylic
Colour Pencil
Graphite
Oil
Pen & Ink
Watercolour
ASTHMA
IS
ON
THE RISE.
Pets w Holidays w Special Occasions w Just for Fun
www.spiltinkgallery.com
(503) 442-6427
Help us find a cure.
1-800-LUNG-USA
Department of Consumer & Business Services
Workers’ Compensation Board (WCB):
What It Is and What It Does
A worker who disputes the outcome of his or her workers’ compensation claim for a work-
related injury or illness may request a hearing before the Hearings Division of the Workers’
Compensation Board. WCB offers mediation to workers and employers/insurers as an
alternative to hearings. If both parties agree to mediation, they may schedule by calling
(503) 934-0104. Workers who don’t speak English may use interpreter services provided
by WCB, for hearings and mediations. These services can be arranged by calling (503)
378-3308.
For questions about the hearing process, or the
Oregon’s workers’ compensation system, call the
Ombudsman for Injured Workers at 1-800-927-1271.
www.wcb.oregon.gov