Samsung's Lee Jae-yong may rejoin board after receiving pardon

South Korean President Yoon Suk-yeol clears the heir to the country’s biggest company of bribery charges

Samsung heir Lee Jae-yong has been granted a special pardon effective from August 15. AP
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Samsung Electronics' Lee Jae-yong, professionally known as Jay Y Lee in the West, had his right to work at the company restored by South Korea, opening the way for him to formally take the helm of the country’s largest conglomerate that is battling global demand and supply shocks.

South Korean President Yoon Suk-yeol cleared the heir to the country’s biggest company of bribery charges, for which Mr Lee spent 18 months in prison before his release on parole a year ago.

Samsung’s shares rose 1.3 per cent in Seoul on the news.

The move comes as the global economy faces successive shocks from rising inflation, market disruption from the war in Ukraine and logistics challenges triggered by China’s “zero Covid” lockdowns, raising the threat of uncertainty for export-orientated South Korea.

Rising geopolitical tension between the US and China over chip technology also complicates long-term operation plans for Samsung, which runs big microchip manufacturing plants in the two largest economies.

“In a bid to overcome the economic crisis by vitalising the economy, Samsung Electronics vice chairman Lee Jae-yong, whose suspended prison term was ended recently, will be reinstated,” the Korean government said.

Mr Lee apologised to the Korean public on Friday and promised to “start anew”.

“I will try harder to give back to society and grow together,” he said.

Mr Lee, 54, has been granted a special pardon effective as of August 15, the country’s independence anniversary.

He had initially been sentenced to 30 months for alleged attempts to bribe a sitting president and win government support for his succession.

The reinstatement will allow him to rejoin the board at the technology company, as well as travel overseas for deals.

“Samsung is in a crisis as it has lost its two strengths: technology leadership and strict management,” said Park Ju-gun, head of corporate research at Leaders Index.

“There is an absence of a control tower making the right decisions at the right time to keep its leadership in the semiconductor industry.”

The pardon enables Mr Lee to officially regain his leadership role. Under the conditions of his parole, he was prevented from taking up employment for a period of five years and has only been receiving reports from company executives without having a proper board title.

Mr Lee is widely expected to expedite major strategic decisions ranging from chip-making deals to governance reforms.

Samsung, the world’s largest producer of memory chips, smartphones and mobile displays, warned during its earnings call last month that the Ukraine war, inflation and waning consumer demand made it immensely challenging to issue a forecast for the coming year.

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Samsung Galaxy phones through the years

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One of the key outstanding questions around Mr Lee is whether he will seek to take over as chairman of the technology company.

Ever since his father, Lee Kun-hee, passed away in October 2020, the post to oversee the $280 billion company has remained vacant.

Still, Mr Lee’s legal woes will not be cleared for the next few years as he is being separately prosecuted in relation to a merger of some Samsung subsidiaries and will be attending weekly hearings related to that case.

Updated: August 12, 2022, 7:44 AM
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