A leadership vacuum in country's most powerful dynasty

Lee Jae Yong arriving at the special prosecutor's office yesterday.
Lee Jae Yong arriving at the special prosecutor's office yesterday.PHOTO: BLOOMBERG

SEOUL • Smuggling, tax evasion, slush funds, bribery and even suicide - the Lee family of the Samsung Group has seen it all.

Over successive generations, they have become South Korea's most powerful dynasty and built the nation's largest conglomerate, now a major pillar of the economy.

But as attitudes change towards chaebols, or conglomerates, their power and influence are being challenged.

With chairman Lee Kun Hee now lying in hospital after a 2014 heart attack, South Korea's biggest chaebol has been moving to restructure the business empire and solidify control over affiliates to pave the way for his son, vice-chairman Lee Jae Yong, 48, to take over.

But with the younger Lee, who was de facto chief of Samsung, now arrested on bribery charges linked to President Park Geun Hye's corruption scandal, questions have arisen over succession plans and the future of the company.

They have become South Korea's most powerful dynasty and built the nation's largest conglomerate. But as attitudes change towards conglomerates, their power and influence are being challenged.

Speculation even arose that the Lee family's second child, Boo Jin, nicknamed "Little Lee Kun Hee" for her personality and management style which are similar to her father's, could fill the leadership vacuum if her brother ends up going to jail. Jae Yong is now held at Seoul Detention Centre, where Ms Park's confidante, Choi Soon Sil. and key aides are also being detained and charged in connection with the corruption scandal.

Experts say the top job is only reserved for the son, and there will be no alternative, no matter what. But the saga will probably leave a dent in his reputation and raise doubts about his capability as the next leader of the company.

Jae Yong, a Harvard Business School graduate, has long been groomed to lead the country's biggest brand name.

Samsung has stakes in electronics, construction, shipbuilding, insurance and more. Jae Yong entered Samsung Electronics in 1991, and is the first Samsung chief to be arrested on a criminal charge. His case is pending trial.

His grandfather and father had their own run-ins with the law. Samsung's late founder, Mr Lee Byung Chul, was investigated in 1966 for a saccharin smuggling case.

Mr Lee Kun Hee was charged twice, for bribery in 1996 and tax evasion in 2008, but received suspended sentences and presidential pardons.

The private life of the Lee family has also been turbulent.

Both Jae Yong and Boo Jin are divorced. Tragedy befell the family in 2005 when their youngest sister Yoon Hyung killed herself in New York at age 26, reportedly because their father forbade her to marry the man she loved.

Chang May Choon

A version of this article appeared in the print edition of The Sunday Times on February 26, 2017, with the headline 'A leadership vacuum in country's most powerful dynasty'. Print Edition | Subscribe