Samsung heir sentenced to five years on corruption charges

Lee Jae-yong was convicted of bribery and other charges in connection with scandal that brought down former South Korean president

Samsung Group heir Lee Jae-yong leaves the Seoul Central District Court following his verdict in Seoul on August 25, 2017.
The heir to the Samsung business empire, which includes the world's biggest smartphone maker, was sentenced to five years in prison for bribery and other offences in connection with the scandal that brought down South Korean president Park Geun-Hye. / AFP PHOTO / POOL / Chung Sung-Jun
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The heir to the Samsung business empire, which includes the world's biggest smartphone maker, was sentenced on Friday to five years in prison for bribery and other offences in connection with the scandal that brought down South Korean president Park Geun-hye.

Lee Jae-yong's penalty could leave the giant firm rudderless for years and hamper its ability to make key investment decisions.

The vice chairman of Samsung Electronics, 49, arrived at Seoul Central District Court on a justice ministry bus handcuffed, bound with white rope around his dark jacket, and carrying an envelope of documents.

Lee was found guilty of bribery, embezzlement, perjury and other charges centred on payments and promises by Samsung totalling 43.3 billion won (Dh141 million) to Ms Park's secret confidante Choi Soon-sil.

The court found the money was in return for policy favours including government support for Lee's hereditary succession at the group, after his father was left bedridden by a heart attack in 2014.

The defence had denied the charges, saying Samsung was pressured by Ms Park to make the donations - and that Lee was not aware of them and did not approve them. Four other top Samsung executives were also convicted and received sentences of up to four years.

Lee's lawyers said he would appeal.

The demonstrators who mounted giant candlelit protests against Ms Park last year also targeted Lee and other chiefs of the chaebols, as the family-controlled conglomerates that dominate Asia's fourth-largest economy are known.

South Korea's GDP is still growing but social and economic frustrations have mounted over the benefits not being equally shared.


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Around 800 riot police were deployed around the court to prevent possible clashes between rival sets of demonstrators, South Korea's Yonhap news agency said.

The court was deluged with hundreds of applications for the 30 seats available to members of the public, which were allocated by lottery.

Ms Park's own trial began in the same courtroom in May, and it also saw Lee's father Lee Kun-Hee convicted of tax and other offences in 2008, receiving a suspended sentence.

The verdict could add impetus to new president Moon Jae-in's campaign pledges to reform the chaebols.

The firms have long had murky connections with political authorities in South Korea, and past trials of their leaders have often ended with light or suspended sentences, with courts citing their contributions to the economy.

The Lee clan directly owns about 5 per cent of Samsung Electronics shares, but maintains its grip on the wider group through a byzantine web of cross-ownership stakes involving dozens of companies.

The court said Ms Park was aware that Lee wanted state approval for a controversial merger of two Samsung units in 2015, seen as a key step to ensuring his accession.

The deal was opposed by shareholders who said it wilfully undervalued shares of one of the firms. But it eventually went through after the national pension fund - a major Samsung shareholder - approved it.

Analysts differ on the potential impact of the verdict and sentence on Samsung.

Lee has been Samsung's de facto leader since his father fell ill, but his lawyers and ex-members of the former elite Future Strategy Office, which dictated the vast group's overall direction and major business decisions, sought to portray him as naive and inexperienced.

"Samsung will not be doomed without Jay Lee," said Geoffrey Cain, the author of a forthcoming book on the group. "It's up to the specialists to make their own decisions."

Samsung appears to have been unaffected by Lee's absence so far - he has been in custody since February - with flagship subsidiary Samsung Electronics making record profits on the back of strong demand for its memory chips.

But Chung Sun-sup, the head of corporate analysis firm, said major chaebol decisions on large-scale acquisitions or investments "are often endorsed by the patriarch of a ruling family", and with Lee in prison the firm "may move more slowly than before".

Its shares have soared in recent months, but were down 1.05 per cent on Friday afternoon after the verdict.

The ruling is seen as a strong indicator of the likely outcome in Ms Park's trial, as some of the charges against the ousted head of state are inextricably linked to the accusations Lee faced.