Seoul - Jay Y. Lee, vice chairperson of
Samsung, was convicted of bribery and sentenced to five
years in prison, a blow to the heir apparent of the world’s biggest
maker of smartphones and memory chips.
A three-judge panel of Seoul Central District Court found Lee guilty
of bribery, perjury and embezzlement on Friday. The 49-year-old has been
in detention since February and proclaimed his innocence throughout the
trial and his lawyer said he would appeal the verdict. Prosecutors had
sought 12 years in prison.
The ruling casts doubt over Lee’s return to the conglomerate his
grandfather founded almost 80 years ago and is now in a battle for
smartphone supremacy with
Apple. Since his arrest in February, Samsung Electronics has bounced
back from last year’s exploding Note 7 fiasco to release a new flagship
and post record earnings with its shares also reaching an all-time
joins the list of Korean business leaders to be convicted of corrupt behaviour, one that already includes his father
Lee Kun-hee. The elder Lee received a suspended three-year prison sentence for evading taxes and embezzling corporate money.
Along with Lee’s sentencing, former Samsung executives were also
convicted on Friday. Former Samsung corporate strategy office chief Choi
Gee-sung and former President Chang Choong-ki were each sentenced to
four years in prison, while two other executives get suspended prison
This year’s case, dubbed the “
Trial of the Century,” transfixed the nation as it shone a spotlight on
the interaction between South Korea’s chaebol and the political elite.
Through hundreds of hours of testimony from dozens of witnesses,
prosecutors sought to draw a link between backing from a state-run
pension for a 2015 merger of Samsung affiliates and money paid to a
confidante of then President Park Geun-hye, including an $800 000 horse
for the friend’s daughter.
Lee, choking back tears at times, testified that he knew little about
Samsung affiliates other than the electronics business, and that he
wasn’t part of the approval or decision-making process. Song Wu-cheol,
Lee’s lawyer, said they would appeal the ruling.
Samsung is comprised of about 60 units selling life
insurance to ships. Since Lee’s arrest, it has posted record net income
and released the Galaxy S8 smartphone to critical and commercial
success. Semiconductor sales are booming, shares reached an
all-time high and it has just
unveiled the new Note 8 device.
Controlled by the Lee family through a web of cross-holdings, Samsung
is South Korea’s biggest conglomerate, comprised of about 60 units
selling life insurance, cargo ships and clothes. The empire has a market
capitalisation of about $395bn.
Samsung makes up most of that, with a value of $272bn. It is the world’s biggest maker of smartphones and memory
customers including Apple, Walmart and Microsoft,
according to supply chain data compiled by Bloomberg.
Samsung shares have risen 30% this year,
outperforming the benchmark Kospi. The index was little changed on Friday.
Brushes with the law aren’t new to the Lee family. Lee Kun-hee
suspended three-year prison sentence for evading taxes. He was later
pardoned by then-President Lee Myung-bak.
The younger Lee’s absence
could lead to further empowerment of managers such as vice chairperson
Kwon Oh-hyun, who oversees semiconductors; President
J.K. Shin, who is in charge of mobile products; and President
Yoon Boo-keun, who runs the consumer appliances business.
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