South Korea’s Samsung heir faces the day of reckoning after four years of the transplant process

SEOUL (Reuters) – A South Korean court will bring Samsung Electronics Co Ltd heir Jay Y. Lee on Monday on bribery charges, a ruling likely to have ramifications not just for his company but for all of Korea’s chaebol conglomerates. South.

Lee, 52, was convicted of bribing an associate of former President Park Geun-hye and was jailed for five years in 2017. He denied wrongdoing, his sentence was reduced and suspended on appeal, and was released later. having served a year.

The Supreme Court then referred the case to the Seoul High Court, which will rule on it, and the ruling on Monday. Prosecutors have called for a nine-year prison sentence.

Legal experts say it is highly unlikely that the court will acquit Lee, but it could suspend his sentence, allowing him to remain free. Lee is involved in a separate trial for accounting fraud and inventory manipulation.

For many South Koreans, it’s not just Lee who will be in the dock on Monday, but the entire chaebol system of family-owned conglomerates, long credited with building Asia’s fourth largest economy but criticized for exercising too much power and gaps in governance and compliance.

President Moon Jae-in was elected in 2017 on a reformist platform with a promise to clean up chaebol practices, but has since encouraged big business to create jobs, especially as the novel coronavirus has undermined growth.

Similarly, public sentiment appears to have returned in favor of chaebol, and many South Koreans would like to see a decisive Lee at the helm of the Samsung empire as he navigates intensifying global competition and pressure to innovate.

“Any absence could affect Samsung from by undertaking major deals to outpace the competition in the industries it is looking to expand into, perhaps by buying a struggling competitor in contract chip manufacturing, for example, “said Lee Jae-yun, analyst at Yuanta Securities Korea.

‘MITIGATION FACTOR’

On the broader question of chaebols, Cho Chang-hoon, a professor at Hallym University of Graduate Studies, said conglomerates benefit. from centralized decision making are often open to attacks, including from investors, on environmental, social and governance issues.

Lee is committed to changing Samsung and putting compliance and social responsibility top priority, in part by ensuring that an independent compliance panel established last year continues to function.

The judges ruling on Monday said they will take the issue of compliance into account when making their decision.

“This is the first study that has proposed compliance as a mitigating factor in sentencing and could lead to it being used in South Korea’s charisma-driven chaebol culture as a way to build consensus with external stakeholders,” Cho said.

Lee’s father, Lee Kun-hee, who died in October, was convicted of bribery in 1996 and tax evasion in 2008, but never served a prison sentence and eventually won a presidential pardon, clemency that was typically shown to business leaders.

But such treatment can no longer be taken for granted. The leader of the third largest conglomerate, SK, served more than two years in prison for embezzlement in 2013-2015.

A petition signed by 57,440 members of the public and filed in the presidential office hailed Samsung as “the pride of South Korea” and asked Lee to remain free and run the company that pays so much in taxes and provides so many. jobs.

Joyce Lee reporting; Editing by Jack Kim, Robert Birsel