How Samsung supremo landed Games for S Korea
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.
The Winter Olympics begin and, below, Samsung Electronics chairman Lee Kun-hee with his wife, Ra-Hee Hong