Samsung heir sentenced to five years in jail for bribery

Lee Jae Yong, age 49.
Lee Jae Yong, age 49.PHOTO: AGENCE FRANCE-PRESSE

SEOUL • The billionaire head of South Korea's Samsung Group, Lee Jae Yong, was sentenced to five years in jail for bribery yesterday in a watershed for the country's decades-long economic order dominated by powerful, family-run conglomerates known as chaebols.

After a six-month trial over a scandal that brought down then President Park Geun Hye, a court ruled that Lee had paid bribes in anticipation of favours from Park. The court also found Lee guilty of hiding assets abroad, embezzlement and perjury.

Lee, the 49-year-old heir to one of the world's biggest corporate empires, has been held since February on charges that he bribed Park to help secure control of a conglomerate that owns Samsung Electronics, the world's leading smartphone- and chip-maker, with interests ranging from drugs and home appliances to insurance and hotels.

Lee, who emerged stony-faced from the Seoul court in a dark suit, but without a tie, and holding a document envelope, was escorted by Justice Ministry officials back to his detention centre.

"This case is a matter of Lee Jae Yong and Samsung Group executives, who had been steadily preparing for Lee's succession... bribing the president," Seoul Central District Court judge Kim Jin Dong was quoted as saying by Reuters.

The judge said that, as the group's heir apparent, Lee "stood to benefit the most" from any political favours for Samsung.

Lee denied wrongdoing, and one of his lawyers, Mr Song Wu Cheol, said he would appeal.

  • Other notable cases

  • • Mr Lee Kun Hee, Samsung Group chairman and Lee Jae Yong's father, was convicted in 2008 of tax evasion and given a three-year suspended prison sentence and a 110 billion won (S$130 million) fine.

    • Mr Chung Mong Koo, Hyundai Motor Group chairman, was convicted of embezzlement and breach of duty in 2007. He was given a suspended three-year prison term after promising to make a charity donation of 1 trillion won.

    • Mr Chey Tae Won, SK Group chairman, was sentenced to four years in jail in 2013 for embezzling nearly 50 billion won. He was eventually released in 2015.

    • Mr Lee Jay Hyun, CJ Group chairman, was convicted in 2014 of embezzlement, breach of fiduciary duty and tax evasion, and sentenced to 21/2 years in jail.

    • Mr Kim Seung Youn, Hanwha Group chairman, was convicted of embezzlement in 2012 and sentenced to four years in jail and fined 5.1 billion won. He served only a few months behind bars before the sentence was reduced to a suspended jail term.

    BLOOMBERG, AGENCE FRANCE-PRESSE

"The entire guilty verdict is unacceptable," Mr Song said, adding that he was confident his client's innocence would be affirmed by a higher court.

The case is expected to be appealed all the way up to the Supreme Court, likely next year.

The five-year sentence - one of the longest given to a South Korean business leader - is a landmark for South Korea, where the chaebols have long been revered for helping to transform the once war-ravaged country into a global economic powerhouse.

But they have more recently been criticised for holding back the economy and stifling small businesses and start-ups.

Samsung, a symbol of the country's rise from poverty following the 1950-1953 Korean War, has come to epitomise the cosy and sometimes corrupt ties between politicians and the chaebols.

"The ruling is a turning point for chaebols," said Korea Advanced Institute of Science and Technology business professor Chang Sea Jin.

"In the past, chaebols were not afraid of laws because they were lenient. Now, Lee's ruling sets a precedent for strict enforcement of laws, and chaebols should be wary."

Under South Korean law, sentences of more than three years cannot be suspended.

The verdict had little effect on South Korean stocks, which ended the day in positive territory yesterday, backed by institutional buying, Yonhap reported.

Market bellwether Samsung Electronics fell 1.05 per cent, but other heavyweights in the market, including Hyundai and steelmaker, Posco, supported the main index.

A version of this article appeared in the print edition of The Straits Times on August 26, 2017, with the headline 'Samsung heir sentenced to five years in jail for bribery'. Print Edition | Subscribe