Published: Wed, January 20, 2021
Economy | By

Lee Jae Yong: Samsung heir gets prison term for bribery scandal

Lee Jae Yong: Samsung heir gets prison term for bribery scandal

Lee was accused of wiring the equivalent of nearly $40 million from Samsung subsidiaries to two foundations set up by a confidante of impeached president of South Korea Park Geun-hye. After three judges who presided over the case left the courtroom, Lee had a brief conversation with his lawyers and was taken into custody.

Separately, he faces another case related to a controversial merger between Samsung C&T and Cheil Industries in 2015, centered on allegations ranging from violation of capital markets law to a breach of duty.

The elder Lee died a year ago, leading to speculation that there would be a shake-up at Samsung as his heirs could be forced into asset sales or dividend payments to cover a massive inheritance tax bill. In August 2019, however, South Korea's Supreme Court overturned the appeals court, ruling that it was too lenient, and ordered the case to be retried. Lee Jae Yong was sentenced to five years, but he was freed after one year following an appeals court ruling. In February 2017, the independent counsel concluded that Lee had offered bribes worth 29.8 billion won and promised to offer another 21.3 billion won to Park and Choi.

Lee was expected to become chairman of Samsung after the death of his father, Lee Kun-hee, in October 2020. With the lowered amount, Lee's sentence was slashed to a suspended jail term of two years and six months. He denied wrongdoing, the sentence was reduced and suspended on appeal, and he was released after serving a year.

Samsung Group is once again facing turmoil as its de facto chief, Lee Jae-yong, was again imprisoned in a bribery case, sparking worries that uncertainties may further increase over business and investment plans by the global tech behemoth in the post-pandemic era. The key issue in the high court's retrial was whether it would hand down a prison term heavy enough for Lee to return to jail. Choi was sentenced to 18 years in prison on charges including abuse of power, coercion and bribery in June.

The company's shares fell nearly 3% on Monday, the day of the verdict against Lee, but regained most of that on Tuesday.

Lee "actively provided bribes and implicitly asked the president to use her power to help his smooth succession" at the head of the sprawling conglomerate, the Seoul Central District Court said in its verdict. "Given that nature, the court's decision is regrettable", Lee's lawyer, Lee In-jae, told reporters.

Lee, the son of recently-deceased Samsung head and long-time International Olympic Committee member Lee Kun-Hee, had previously spent a year in prison and is hence only expected to serve a further 18 months.

In the dispute, Lee, 52, was accused of offering horses and other payments to a friend of the former president to win support for his formal succession at the corporation.

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