By Don Southerton, Korea Expert Witness Editor and Chief Blogger
Amid threats from North Korea and the death of former South Korean president Roh Moo-hyun, news about Samsung former chairman Lee Kun-hee drew little attention. Ironically, Roh Moo-hyun’s administration had spend considerable time and effort to regulate and investigate the heads of Korea’s major business groups. Over the years, SK, Hyundai Motor, and Samsung weathered numerous investigations, with many of their top leadership being prosecuted.
Most often the practices of the family-run Group’s drawing scrutiny were attempts to transfer wealth to the next generation–with inheritance taxes up to 50%.
Korea media and the NYT notes- South Korea’s Supreme Court said it is upholding a lower court’s ruling that found former Samsung Group Chairman Lee Kun-hee not guilty of allegations of dubious bond transactions aimed at transferring corporate governance to his only son.
The ruling came after the court also overruled an appellate court’s guilty verdict on two former Samsung executives. The two were indicted of allegedly helping Lee Kun-hee’s son, Lee Jae-yong, purchase convertible bonds in Samsung Everland, the Samsung Group’s de facto holding company, at a lower market price, allowing him to take over the group.
“Since the purpose of the [convertible bond] issuance was not aimed at raising funds but was at transferring the company’s governance, that cannot be seen as causing losses to the company,” the Supreme Court said in a statement.
The 67-year-old Lee Kun-hee, who led the country’s biggest conglomerate by assets for about 20 years, quit the group and flagship Samsung Electronics Co. after being indicted of tax-evasion and breach-of-trust charges in April last year.
In October last year, Lee Kun-hee was given a three-year jail term that was suspended for five years and a 110 billion won ($87.2 million) fine for tax evasion.
Tags: Hyundai Motor, Korea Supreme Court, Lee Jae-yong, Lee Kun-hee, Samsung, Samsung Electronics, Samsung Group
To follow up on the Blog post…
Korea Times
While North Korea has been paving the way for its succession from the ailing Kim Jong-il to his third son, Jong-un, South Korea’s largest conglomerate has been also engaged in a similar father-to-son power transition, Hankyoreh reported Saturday.
In a piece Saturday, entitled “Unbridled Samsung: Speeding up Lee Jae-yong succession?” the newspaper said that the retired former Samsung owner, Lee Kun-hee, was cleared of all legal charges, except for tax evasion, which would pave the way for the transfer of the management control to his only son, 41-year-old Jae-yong.
Unfortunately, that news didn’t receive its due attention because the day when the verdict was announced, May 29, coincided with former President Roh Moo-hyun’s funeral, who jumped to his death from a cliff, it said.
Hankyoreh said prosecutor’s office showed “bias” in handling the two significant cases, in the former president’s case by giving favors to a witness who testified against Roh, while in Samsung’s case largely ignoring a whistleblower who testified against the nation’s most influential conglomerate.
Former Samsung Group Chairman Lee Kun-hee was acquitted of charges he illegally transferred his wealth and group control to his only son through convertible bonds (CBs) in Everland, the virtual holding firm of the nation’s largest conglomerate.
“Samsung put a period on the legal debate. But moral debate is still going on,” the newspaper said.
The focus of the attention now is when or whether Chairman Lee will return to the helm of the company’s actual operation and how he will solidify the “Lee Jae-yong system,” it said.
In South Korea, as the nation evolves more democratic, the national sentiment growingly disfavors family inheritance of large companies to other family members, which some people see is usually done by the company’s taking advantage of the legal loophole.
Lee’s only son, Jae-yong, mostly spends his time outside South Korea managing foreign markets. The newspaper said it would take at least two to three years for the younger Lee to prove himself as a leader after he takes over the helm of the company.