Samsung lauds heir as 'best salesman' ahead of graft trial

Samsung Electronics vice-chairman and heir to the business Lee Jae-yong (centre) arriving for a court hearing in Seoul in June. Lee was indicted two weeks ago on suspicions of accounting fraud and stock price manipulation. A trial is scheduled to start on Oct 22. PHOTO: REUTERS

SEOUL • As Samsung Electronics' leader Lee Jae-yong readies for a new trial next month, the tech giant has quietly ramped up a public relations campaign touting Lee's deal-making expertise, including in winning a US$6.6 billion (S$9.03 billion) contract from Verizon.

Lauding the Samsung heir as "the best salesman", the firm has, over the past year, released a flurry of statements and photos of his visits to its many business sites, showcasing a side of the normally reserved Lee, whose public image has taken a battering over a lengthy bribery scandal.

The mounting legal travails for Lee, which have cast a cloud over the leadership of one of the world's biggest tech companies, coincide with the reformist drive of President Moon Jae-in, elected three years ago after the impeachment and jailing of his predecessor Park Geun-hye.

Lee was indicted two weeks ago on suspicions of accounting fraud and stock price manipulation. A trial is scheduled to start on Oct 22.

The stakes are high, and Samsung's public relations machine has stepped up a charm offensive, telling local media in a message last week that it expected cutting-edge network equipment business to grow into "the first flagship business of the Lee Jae-yong era".

According to the message seen by Reuters, Samsung said Lee actively engaged Verizon chief executive Hans Vestberg on Mr Vestberg's visit to South Korea last year, and made several video calls with him ahead of clinching the billion-dollar contract.

Last Monday, Samsung announced the contract to provide network equipment to Verizon in the United States, considered a major win as the firm seeks to narrow the gap in the 5G network market with front runner Huawei, which is grappling with US restrictions.

In a statement to Reuters, Samsung said Lee "has played a key role in developing new growth businesses and relationships with global clients and partners".

"The company responded to media requests and inquiries about his role and client relations," it added, saying that this "was part of normal communications with journalists".

Samsung also highlighted Lee's role in its 5G deal with Japan's KDDI last year despite the worsening bilateral relations.

Governance expert Park Sang-in from Seoul National University, said: "Samsung keeps exposing Lee to the media, to give the message that Lee plays a big role, so if he goes to jail or faces lengthy trials, this would disrupt management, put Samsung in difficulty and the Korean economy in difficulty."

REPUTATIONAL DAMAGE

The fresh charges against Lee have further scarred the 52-year-old Samsung scion's reputation and come at a time when the world's biggest memory chipmaker and No. 2 smartphone manufacturer navigates intensifying competition and the coronavirus pandemic.

Lee is also facing a separate trial on charges of bribing former president Park in an influence-peddling scandal to take control of the business empire from his father, group patriarch Lee Kun-hee, who has been incapacitated since suffering a heart attack in 2014.

President Moon has pledged to curb the power of South Korea's chaebols, or family-owned conglomerates. In the past, convicted business tycoons were shown leniency by the courts for their economic contributions. But in a departure, Lee was jailed for nearly a year over the scandal involving Park.

Lee's father was previously convicted of breach of trust and tax evasion charges, but later received a presidential pardon.

In June, while refuting media reports on Lee's alleged wrongdoings, Samsung said such reports are "never desirable not only for Samsung's future, but (also) the future of the Korean economy".

Samsung Electronics reported annual revenue last year equivalent to 12 per cent of South Korea's economic output.

REUTERS

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A version of this article appeared in the print edition of The Straits Times on September 14, 2020, with the headline Samsung lauds heir as 'best salesman' ahead of graft trial. Subscribe