- Created: Friday, 25 August 2017 15:59
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Today, Lee Jae-yong, the heir to the Samsung business empire has been convicted of bribery and embezzlement and sentenced him to five years in prison.
This gives rise to challenges for Samsung, a web of businesses so huge that it accounts for about one-fifth of South Korea’s exports, just Samsung on its own!
The court ruled that Mr. Lee and four other Samsung executives paid $6.4 million in bribes and other inducements to ensure that the country’s disgraced former president, Park Geun-hye, supported a complicated corporate deal that strengthened Mr. Lee’s grip on Samsung Electronics.
“The essence of this case is the unethical bond between politics and money,” said Judge Kim Jin-dong. “The people expect that the power of a president, the top authority under the Constitution, will be used to serve all people and that big businesses act with social responsibility, through legal economic activities.”
“Through this case,” he continued, “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.”
Lee was also found guilty of hiding assets overseas and of perjury for falsely testifying at a parliamentary hearing on the scandal. Other former top executives who advised Mr. Lee were also sent to prison or given suspended terms.
Unsurprisingly Lee’s attorneys immediately said they would appeal, and experts said it would likely go all the way to the country’s supreme court.
“As a legal professional, I cannot possibly accept any part of the lower court’s guilty verdicts,” said Song Wu-cheol, the lead defense attorney, who added, “I am confident that the appeals court will definitely find the defendants not guilty on all counts.”
This verdict sends the strongest message yet to South Korea’s large family-controlled businesses that their long period of economic dominance in one of the world’s most successful economies is under threat as they are widely viewed as sources of corruption and impediments to the country’s progress.
“We hope this will be the first step in cutting the stubborn ties of corruption between politics and business, which has been a roadblock to progress in our society,” said Yoon Young-chan, senior secretary at the Blue House, the South Korean president’s executive office and residence.
What knock on effects that this will have for Samsung as a business is of course unknown but, it's bound to shake things up a bit we'd think.