Samsung heir Jay Y Lee jailed for five years
- Author: Zachary Reyes Aug 25, 2017,
Aug 25, 2017, 18:09
Although prosecutors demanded that Lee be given a 12 year jail term, the ruling still makes it the longest sentence handed down to any senior leader of a family-owned South Korean corporation.
The Seoul Central District Court found Lee guilty of paying bribes worth millions of dollars to Choi Soon Sil, a childhood friend and confidante of former president Park Geun-hye who gained a sinister reputation due to the influence she exercised over the country's leader, in exchange for business favours.
Choi, who had known Park for some 40 years and is also on trial, is accused of using her connection to the former president to extort money from the big conglomerates in South Korea in return for business favors, with Park's knowledge.
While the ruling casts doubt over Lee's return to the conglomerate his grandfather founded nearly 80 years ago, the business is doing well, with Samsung Electronics Co. posting record earnings and its shares rising 30 percent this year, outperforming the benchmark Kospi.
But since Lee's father Lee Kun-hee suffered a heart attack in 2014, he has been considered to run the Samsung empire. Two other former executives received suspended prison terms.
Samsung has not denied transferring funds.
"Lee Jae-yong's imprisonment is going to alter or abolish the traditionally close alliance between the government and big businesses", said Chung Sun-seop, head of corporate-research firm Chaebul.com in Seoul.
"Through this case the people have come to question the fairness and honesty of the president and have come to distrust the ethical values of Samsung, the largest conglomerate". South Korea's new president, Moon Jae-in, who replaced thedisgraced Park after a May 9 election, has pledged to rein inthe chaebols, empower minority shareholders and end the practiceof pardoning corporate tycoons convicted of white-collar crime.
Samsung did not deny donating money to the Choi-controlled foundations, but the four executives said they had been forced to donate out of fear of what Park and Choi could do to their business. Although most candidates for South Korea's top job make this promise, including the ill-fated Park, the Lee ruling is the surest sign yet that South Korea's courts have taken note of the public mood.
There is also potential for a destabilizing family feud over inheritance when the elder Lee dies.
The sentencing comes at a critical time for Samsung Electronics, the most valuable part of the empire. "We can not accept the verdict", Lee's lawyer Song Woo-chul said after the ruling.
Two other Samsung executives embroiled in the case, Choi Gee-sung and Chang Choong-ki, were convicted alongside Lee and sentences to four years in prison.
Shares of Samsung Electronics dropped more than 1 percent, and other group companies, including Samsung C&T and Samsung SDS, also turned lower after the verdict.
They said Lee was aware that Park wanted Samsung to sponsor the equestrian training.