Samsung’s Lee Jae-yong, the company’s heir apparent, has been indicted on charges of embezzlement and bribery.
Samsung Heir Charged With Bribery, Uncertainty Over Company Future
Lee Jae-yong, Samsung’s de facto leader has had his sentence handed down to him following a scandal that saw the impeachment of South Korea’s president Park Guen-hye.
News of his indiction together with other four Samsung executives was announced by the special prosecutor’s office in South Korea.
Following the announcement, three of the indicted officials resigned from their respective positions at the company
The giant electronics company also said it would abolish its strategic office in charge of coordinating the various functions of the sprawling company.
Samsung is accused of extending donations to a nonprofit organization owned by Choi Soon-sil, a close friend of the impeached president of South Korea, Ms. Park in return for government favors.
Mr. Lee had been arrested at the start of February as prosecutors prepared a case against him.
The Samsung heir apparent was accused of extending up to 41bn won ($36m) to Ms. Choi’s organizations with prosecutors alleging that this was done in order to gain government support for a significant restructuring of the company that would ensure the Mr. Lee would become the company’s next leader.
Mr. Lee is currently at the helm of leadership at the giant conglomerate as he stands in for his sick father who is the company’s chairperson.
At the heart of the scandal is a controversial merger that needed the support of the national pension fund. Mr. Lee’s donations were seen as being a bribe in return for government support.
At a parliamentary hearing in December last year, Samsung said that it gave up to 20.4bn to two organizations but said it did not ask for favors in return.
Mr. Lee testified that he gave money and a horse to Ms. Choi’s daughter for her equestrian career but he now says he regrets this decision.
In addition to the scandal centering on the relationship between President Park and Ms. Choi, there are also other issues of leaking of classified information and engagement in cult activities.
Ms. Choi’s father had a close friendship with President Park’s father who was South Korea’s president in the 1970s.
Ms. Choi is also being accused of taking advantage of her friendship with President Park to meddle in politics.
Currently on trial, she faces multiple charges including attempted fraud, coercion and abuse of power.
Last December, Parliament voted to impeach President Park and the constitutional court is now hearing her case. She no longer has presidential powers.
Following his father’s heart attack in 2014, Mr. Lee is currently considered as the de facto leader of Samsung.
Whatever the outcome, this case has had a massive impact on the company. Mr. Lee’s arrest may not have adverse effects in the short-term activities of the company but the implications over the long term could be significant.
Samsung is among the world’s largest electronic companies and presents itself as a premium brand. For its leader to be caught up in such a scandal is quite embarrassing.