Three years after explosive allegations of graft and corruption brought down the government of Asia’s fourth-largest economy, South Korea’s chaebol culture will again come under the microscope when Samsung Electronics Co. heir Jay Y. Lee returns to court.
The billionaire’s retrial over expanded corruption charges begins Friday at the Seoul High Court, rebooting a landmark case that led to the impeachment of then-president Park Geun-hye and inflamed popular anger over the power of Korean conglomerates, also known as chaebols. It threatens to potentially throw the de-facto leader of Korea’s biggest company back in jail.
“This is problematic for Samsung as it seeks to elevate and portray him as a Silicon Valley-minded reformer,” said Geoffrey Cain, author of an upcoming book about Samsung. “He won’t be able to shed the image of corruption that easily.”
The appeals court that decided to release Lee in early 2018 from jail, where he’d spent about a year after his initial arrest, will decide his final sentence over the course of the next few months. Factoring in the trial’s social and economic implications, Park Sang-in, a professor at Seoul National University, warns it could take longer than usual and stretch beyond six months.
Unless new evidence emerges during the retrial, the appeals court is expected to rule in line with the decision of Korea’s Supreme Court, which found that Lee had used three horses and additional funds, via an intermediary, to bribe President Park while seeking political support for his succession as Samsung chief. This would mean altering Lee’s presently suspended prison sentence.
The total amount of alleged bribery determined by the top court, including all three equines, carries a minimum sentence of five years, which cannot be suspended in the same way that Lee’s existing sentence has been. Media coverage in Korea, however, has centered on Article 53 of the Korean Criminal Act, which stipulates there could be a discretionary mitigation of the punishment “when there are extenuating circumstances.” In Lee’s case, the damage to Samsung -- crucial as it is to Korea’s economy -- could be presented as grounds to keep him out of prison.
Even in the event of an unfavorable ruling, the 51-year-old Samsung scion would still be able to appeal at the Supreme Court one more time, which could take another year. To avoid such a protracted legal battle, people in and out of Samsung have expressed hope that the court may reduce the punishment and slash the sentence to a suspended 30-month term.
But close observers of Korean politics and its mighty family-run conglomerates argue there is little chance that Lee will avoid imprisonment, saying Samsung should brace for the worst case scenario.
“If this company had a normal corporate culture, it could start a process of searching beyond Jay Y. Lee, just as Steve Jobs and Jack Ma spent time designating their successors,” said Seoul National University’s Professor Park. “Samsung, however, sticks to an idea that only a controlling family member should manage its overall business. If Lee can step back to stay as a major shareholder and find a ‘real’ professional manager, it may light the fuse for changes.”
Samsung, the world’s largest memory chip and smartphone maker, has an army of business experts and senior managers who can run its day-to-day operations, according to Park Ju-gun, president at corporate research firm CEOScore. Lee could continue his management even while in prison and then come back as a leader when he’s out, emulating the example of his chaebol peers including SK Group chairman Chey Tae-won and CJ Group chairman Lee Jay-hyun, who today are active leaders of their conglomerates in spite of having spent years in jail.