Samsung Group head sentenced to five years in bribery trial

Samsung Group leader Jay Y. Lee has been convicted of bribing former South Korean President Park Geun-hye and sentenced to five years for bribery, hiding assets abroad, embezzlement and perjury.

According to the Guardian, prosecutors asked for a 12 year term.

Reuters reported that Lee’s lawyer said his team found the ruling unacceptable and would appeal.

According to the news agency hundreds of diehard supporters of the former president reacted with outrage on Friday after the court’s verdict. Park was forced from office in disgrace in March over the payments scandal and is in detention and is in the middle of her own trial for corruption.

As we reported earlier, Lee — believed to be the country’s third richest person and heir to the Samsung empire —  testified over two days during the trial that he had no knowledge of any pressure from former president Park Geun-hye to pay bribes, and that he did not wield extensive power while running the company.

Lee was accused of paying the former president and her associate some 43 billion won (approximately $49.54 million Canadian) in bribes in order to maximize his control of the Samsung empire.

According to his testimony, “90 to 95 per cent” of Lee’s work at Samsung was limited to being vice-chairman of its flagship electronics division. For other matters, he was assisted by the corporate strategy office, headed by his former top lieutenant, Choi Gee-sung, Thomson Reuters reported.

“While people outside Samsung think I’m higher in the hierarchy, I’ve never even taken a host seat at any meeting or luncheon (when Choi was around),” Lee was quoted telling the court.

According to the CBC, during the trial, Samsung acknowledged it offered to donate the money to entities backed by Park’s close friend, Choi Soon-sil, including $7.5 million to sponsor the equestrian career of Choi’s daughter. In return for the contributions, prosecutors said, Samsung sought government support for a controversial 2015 merger of two of its affiliates, which helped tighten Lee’s control over the conglomerate.

The merger was approved, but according to the U.S.-based National Public Radio (NPR) while it was good for the family it was widely seen as not favorable for shareholders.

ZDnet.com noted that Samsung said the payments to the Choi-controlled foundations was for public good and to help sporting organizations. However, the judge said Lee likely knew the foundation was “not a conventional one” and that the payments would be spent to buy horses for Choi’s equestrian-competing daughter. The judge also said that the vice-chairman and his lieutenants would have known that the payments would be helpful in the merger that saw Lee’s control over the conglomerate increase.

The Guardian said the conviction has at the very least put on hold Lee’s attempts to exert total control over the Samsung group, of which he has been the de facto head since his father suffered a heart attack in 2014. In the immediate wake of the judgement Samsung shares fell one per cent.

Samsung was founded in 1938.

The decision comes just days after Samsung released its Galaxy Note 8 phablet with a 6.3-in. screen.

“I doubt customers will see much of a change near term,” from the verdict, said industry analyst Rob Enderle.  “This will weaken Samsung in South Korea making it far more difficult for them to get government concessions on things like plants, people, government contracts, and international trade assistance.  Rather than being a favored son, they’ll be a bit of a pariah, at least with government officials, for a bit.  But, unless the firm itself is hit with substantial financial or physical sanctions, day to day execution wouldn’t be compromised.  Long term there will be changes in the company tied to whoever seizes power but, near term, this is more of an image/political problem than an operational one.”

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Jim Love, Chief Content Officer, IT World Canada

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of ITWorldCanada.com and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including ITBusiness.ca and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@] soloreporter.com

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