How Sam­sung supremo landed Games for S Ko­rea

The Weekend Australian - - THE WALL STREET JOURNAL - TI­MOTHY W. MARTIN

In late 2009, South Ko­rea’s pres­i­dent par­doned Sam­sung chair­man Lee Kun-hee from fi­nan­cial wrong­do­ing con­vic­tions and gave him a mis­sion: get the 2018 Win­ter Olympics.

South Ko­rea had failed twice be­fore. In a news­pa­per col­umn, the chair­man of Ko­rea’s Olympic Com­mit­tee said Mr Lee would pro­vide the “re­in­force­ments of a thou­sand soldiers and ten thou­sand horses”.

Mr Lee spent much of the next 18 months trav­el­ling the world, as­sur­ing In­ter­na­tional Olympic Com­mit­tee vot­ers South Ko­rea could han­dle the event. It was a com­pelling pitch, in some cases fa­cil­i­tated by Sam­sung for­eign of­fices, com­ing from the head of the coun­try’s big­gest busi­ness em­pire. Sam­sung was also a top­tier Olympics spon­sor, pay­ing more than $US500 mil­lion to sup­port the Games over the years. In July 2011 his work paid off: PyeongChang’s bid won.

Now the Olympics are here, and Sam­sung’s name is ev­ery­where. A spe­cial com­pany pavil­ion will show­case the com­pany’s vir­tual re­al­ity head­sets and other gad­gets. Ath­letes will get spe­cialedi­tion Galaxy Note 8 de­vices.

Even Lee Jae-yong, Mr Lee’s son and now Sam­sung’s de facto head, is free to at­tend af­ter an ap­peals court un­ex­pect­edly re­leased him from prison on Mon­day af­ter a bribery con­vic­tion last year.

Never be­fore have an Olympics, a host coun­try and a ma­jor com­pany been so closely in­ter­twined. South Ko­rea got the Olympics it wanted, and Sam­sung stands to reap div­i­dends from its heavy in­volve­ment in the Games.

“To put it very sim­ply, it is very un­com­mon” to see a com­pany — let alone a spon­sor — get in­volved in an Olympics bid, said Michael Payne, a for­mer IOC mar­ket­ing di­rec­tor, who said he wor­ries spon­sor in­volve­ment could un­duly in­flu­ence IOC vot­ers.

“Sam­sung was very ac­tive mak­ing friends.”

So ex­tra­or­di­nary is the over­lap between Sam­sung, South Ko­rea and the PyeongChang Games it is un­likely to be re­peated, say IOC mem­bers and Olympics ex­perts. Mr Lee’s lob­by­ing and Sam­sung’s close in­volve­ment are now con­sid­ered in­ap­pro­pri­ate by some Olympics ex­perts and vot­ers.

The IOC’s code of ethics, cre­ated in 1999, in­structs spon­sors to “re­frain from sup­port­ing or pro­mot­ing” bids. Olympics or­gan­is­ers want their big­gest fi­nan­cial back­ers to re­main neu­tral, root­ing for all na­tions, in­stead of us­ing mar­ket­ing dol­lars as a back­door way to se­cure the Games for a favoured lo­ca­tion. Spon­sors typ­i­cally oblige be­cause they fear busi­ness blow­back from coun­tries that field ri­val bids, or the brand dam­age from cham­pi­oning a los­ing ef­fort.

In South Ko­rea, the gov­ern­ment has long leaned on its big­gest con­glom­er­ates, or “chae­bols”, to sup­port state goals, in­clud­ing help­ing with sport­ing events like the 1988 Sum­mer Olympics and 2002 FIFA World Cup.

With an em­pire span­ning smart­phones, theme parks and bio­phar­ma­ceu­ti­cals, Sam­sung is by far the most im­por­tant com­pany in the coun­try, ac­count­ing along with its af­fil­i­ates for nearly one-third of South Ko­rea’s stock­mar­ket value.

South Ko­rea’s ap­proach to win­ning the 2018 Games was par­tic­u­larly un­usual be­cause Mr Lee was an IOC del­e­gate him­self, which ef­fec­tively shielded him from rules forc­ing spon­sors to the side­lines. Del­e­gates to the IOC group that chooses host coun­tries are al­lowed to lobby freely, without con­flicts of in­ter­est, since they nor­mally aren’t linked to spon­sors, ex­perts say.

Mr Lee’s dual role as chair­man of a ma­jor Olympics spon­sor and an IOC mem­ber has never oc­curred be­fore or since, say Olympics vot­ers, his­to­ri­ans and bid con­sul­tants.

“What Sam­sung did, and was able to do, I can­not see it hap­pen­ing again,” said Richard Peterkin, an IOC mem­ber from Saint Lu­cia since 2009 who now sits on the group’s mar­ket­ing com­mis­sion.

Although he doesn’t think Sam­sung’s links to the bid con­sti- tuted a clear breach of ethics, he says he doubts the IOC would ac­cept a top-tier spon­sor to­day whose com­pany head served as an IOC mem­ber.

No one has ac­cused Sam­sung of il­le­gal be­hav­iour in pur­su­ing the 2018 Games. The com­pany de­clined to com­ment. Mr Lee, 76, is in­ca­pac­i­tated af­ter a 2014 heart at­tack, and a com­pany spokesman said he was un­able to com­ment.

Af­ter Salt Lake City of­fi­cials were sus­pected of mak­ing pay­ments to IOC mem­bers to help win the 2002 Win­ter Olympics, the IOC cre­ated rules aimed at re­mov­ing any hint of in­flu­en­ceped­dling. Among other things, they pro­hib­ited host na­tions’ bid com­mit­tees from go­ing on pri­vate road­shows to pitch their cities.

Those who heard Mr Lee’s PyeongChang pitch, of­ten ac­com­pa­nied by his son-in-law, a high-rank­ing ex­ec­u­tive at a Sam­sung af­fil­i­ate who trans­lated for him, say they separated his IOC role from his job lead­ing a ma­jor Olympics spon­sor.

Ger­hard Heiberg, an IOC mem­ber from Nor­way, met with Mr Lee and his fam­ily in Oc­to­ber 2010 for a beef din­ner in Aca­pulco, Mex­ico, where a con­fer­ence for na­tional Olympic com­mit­tees was held. Mr Lee opened up about his health ail­ments, in­clud­ing a bout with can­cer, and said land­ing the 2018 Games would be one of his life’s big­gest achieve­ments.

“It’s now or never,” Mr Heiberg re­calls Mr Lee telling him.

In Au­gust 2009, Mr Lee was sen­tenced to three years in prison and five years of pro­ba­tion for breach of trust and tax evasion, just as the na­tion be­gan mount­ing its third at­tempt for the Olympics.

Lo­cal busi­ness and sports lead­ers begged for his re­lease. Mr Lee’s in­volve­ment was “des­per­ately needed”, said Ko­rean Air chair­man Cho Yang-ho, who headed the PyeongChang bid com­mit­tee, at a news con­fer­ence.

The par­don marked the first time an in­di­vid­ual had re­ceived such ju­di­cial le­niency.

Over the next 18 months, Mr Lee spent 170 days on 11 sep­a­rate trips mar­ket­ing PyeongChang to IOC vot­ers, ac­cord­ing to South Ko­rean me­dia. Mr Lee paid for ex­cur­sions him­self, a source said.

A Sam­sung mega-tablet with a map of PyeongChang was set up at the “Ko­rea House” venue at the Van­cou­ver 2010 Games, said Stratos Safi­oleas, a Greek con­sul­tant who worked on the Pyeongchang bid. “Sam­sung played an enor­mous role, but this never felt awk­ward or strange or wrong,” he said.

AP

The Win­ter Olympics be­gin and, be­low, Sam­sung Elec­tron­ics chair­man Lee Kun-hee with his wife, Ra-Hee Hong

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