What next for Samsung as chief’s ‘trial of the century’ begins

News

Lee Jae-yong, the de facto chief of Samsung and the country’s most prominent business leader, is facing a list of charges including bribery and embezzlement.

This is an archived article and the information in the article may be outdated. Please look at the time stamp on the story to see when it was last updated.

HONG KONG (CNNMoney) — Some South Koreans are calling it “the trial of the century.”

Lee Jae-yong, the de facto chief of Samsung and the country’s most prominent business leader, is facing a list of charges including bribery and embezzlement.

Preliminary hearings in his trial began Thursday with his legal team denying all the charges.

Samsung and the Lee family have faced criminal charges and allegations of corruption in the past. But Lee, who is also known as Jay Y. Lee, is the first Samsung boss to be arrested and put in jail ahead of a trial.

Sitting atop South Korea’s largest conglomerate, the Lee family is widely viewed as corporate royalty. But that’s an awkward place to be right now following public anger stirred up by the corruption scandal that has engulfed Samsung, other big conglomerates and top politicians.

Lee’s father, Samsung Group Chairman Lee Kun-hee, was twice convicted of white collar crime, but avoided jail time thanks to a couple of presidential pardons. He is now ailing after a heart attack in 2014.

The younger Lee, who has been carefully positioned as the heir, may not receive such favorable treatment. President Park Geun-Hye is embroiled in the same political corruption scandal that landed Lee in jail. Four other Samsung executives have also been charged with bribery and other crimes.

Prosecutors allege that Lee, 48, pledged tens of millions of dollars to win favor with Park and secure government support for a merger that helped tighten his grip on Samsung.

Business as usual?

So far, Lee’s legal woes have not slowed down Samsung Electronics, the crown jewel in his family’s business empire. Shares in the company have shrugged off Lee’s arrest last month, hitting record highs this week.

The company recently showed off new gadgets, like tablets and a virtual reality viewer. And it will unveil its latest smartphone later this month, a chance to move closer to putting the debacle over its fire-prone Note 7 behind it.

But Lee, vice chairman of Samsung Electronics, was never involved in the company’s day-to-day operations.

Like his father and grandfather before him, Lee is responsible for the sprawling company’s overarching vision. If he ends up in prison, Samsung, which is sitting on a large pile of cash, could be stuck in a holding pattern for big decisions.

“It’s very hard to delegate a multimillion dollar investment or strategy if you’re in jail,” said Tony Michell, managing director of Korea Associates Business Consultancy in Seoul.

If found guilty of embezzlement alone, Lee would face a minimum of five years in prison.

In the short term, the lights will stay on and it will be business as usual at Samsung.

“They’ve got a leadership team in place, a lot of decision making can still happen for a while, regardless of whether he’s behind bars or not,” said Bryan Ma, an analyst with research firm IDC.

Family ties

If Lee serves time, his family will likely retain its grip on the Samsung empire with relatively little infighting.

“I don’t think there will be a coup d’etat,” said Geoffrey Cain, author of a forthcoming book on Samsung.

Lee’s sister, Lee Boo-jin, runs Samsung’s Hotel Shilla affiliate, one of the world’s biggest duty free retailers. South Korean media often call her “Little Lee Kun-hee,” because she has a similar leadership style to her father.

She could be a real candidate to take on a bigger role in the Samsung empire if her brother goes to prison, but she would probably still take direction from him.

It is highly unlikely Lee will be replaced as Samsung’s heir apparent, experts say. The Lee family and top Samsung officials have spent years paving the way for a father to son succession at Samsung Group.

“What is happening now is not something they expected,” Cain said. “But after having spent two decades trying to get Jay Lee in his position, I am sure they will do everything in their power to make sure he gets to that position.”

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Trademark and Copyright 2021 Cable News Network, Inc., a Time Warner Company. All rights reserved.

About FOX 2 News

FOX 2 and KPLR 11 in St. Louis cover the news in Missouri and Illinois. There are over 68 hours of live news and local programming on-air each week. Our website and live video streams operate 24/7. Download our apps for alerts and follow us on social media for updates in your feed.

President Harry Truman said: “It is amazing what you can accomplish if you do not care who gets the credit.” That spirit is alive and well at Fox 2. Our teamwork is on display each and every day.

Our news slogan is: “Coverage You Can Count On.” We quite frankly are too busy to worry about who gets the credit. Our main concern is serving the viewer.

We go where the stories take us. Whether it be Washington, D.C when a Belleville man opened fire during a congressional baseball game practice or to Puerto Rico where local Ameren crews restored power after more than 5 months in the dark.

Coverage You Can Count On means “Waking up your Day” with our top-rated morning show. From 4:00 am-10:00 am we are leading the way with breaking news. But our early morning crew also knows how to have some fun! Our strong commitment to the communities we serve is highlighted with our Friday neighborhood shows.

Our investigative unit consists of three reporters. Elliott Davis focuses on government waste, Chris Hayes is our investigative reporter, and Mike Colombo is our consumer reporter. They work in unison with the news department by sharing resources and ideas.

We continue to cover breaking news aggressively and relied on our seasoned journalists to make a difference with the stories we covered. The shooting of Arnold Police Officer Ryan O’Connor is just one example of that. Jasmine Huda was the only reporter who had exclusive access to the O’Connor family during his amazing rehabilitation in Colorado.

Last, but certainly not least, FOX 2 and KPLR 11 are committed to covering local politics. We host debates among candidates and have the most extensive presidential election coverage. Our commitment to politics isn’t just during an election year. We produce two political shows that air every weekend.

Popular

Latest News

More News