SEOUL – The jailed de facto leader of the giant Samsung group went on trial today over an allegedly manipulated takeover in proceedings that effectively put South Korea’s system of conglomerate control in the dock.
Samsung – whose flagship subsidiary is among the world’s biggest smartphone and computer chip makers – is by far the largest of the family-controlled empires known as chaebols that dominate business in South Korea, the world’s 12th-largest economy.
Chaebol families often have only a small ownership stake in their empires, but maintain control through complex webs of cross-shareholdings between units.
Lee Jae-yong, the vice-chairman of Samsung Electronics and the grandson of the group’s founder, is accused of stock manipulation, breach of trust and other offences when two other subsidiaries, Samsung C&T and Cheil Industries, merged in 2015.
A court spokesman confirmed to AFP that Lee was present in court.
Lee was the largest shareholder in Cheil Industries, and critics say Samsung sought to artificially lower the price of C&T to give him a bigger stake in the merged entity – a key part of the Samsung structure – consolidating his grip on the conglomerate ahead of his father’s death last year.
He is already serving a two-and-a-half year prison sentence for bribery, embezzlement and other offences in connection with the corruption scandal that brought down South Korean president Park Geun-hye.
Lee’s father, Samsung chairman Lee Kun-hee, died in October, leaving his heirs a vast fortune and an inheritance tax bill of around 13 trillion won (RM48 billion), with the first instalment due by the end of this month.
Samsung is crucial to South Korea’s economic health, and is active in sectors ranging from construction to healthcare to insurance.
But Vladimir Tikhonov, professor of Korean Studies at the University of Oslo, told AFP: “The most problematic aspect is the attempted continuation of the unchallenged dynastic rule over a company that is responsible over 20% of South Korea’s GDP.
“Samsung’s main stakeholders are its shareowners, including the minor ones, its workers and South Korean society as a whole,” he said.
“It is too big to be a dynastic property.”
The trial was originally due to start last month but was delayed when Lee had emergency surgery for appendicitis.
He apologised last May for some governance issues at the group, pledging to ensure “there will be no more controversy over the succession” and that he would not allow his children to take over from him at the firm. – AFP, April 22, 2021
