Lee Kun-hee
Head of Samsung who transformed the company despite his increasingly shady personal reputation
LEE KUN-HEE, who has died aged 78, was chairman of the vast Samsung industrial group created by his father, Lee Byung-chul. He was South Korea’s richest citizen and – despite convictions for bribery, corruption and tax evasion – one of its most powerful. As a global electronics brand and the world’s largest manufacturer of smartphones and memory chips, Samsung is the most successful South Korean chaebol – an entity defined by one observer as “a conglomerate that mixes Confucian values with family ties and government influence”.
Lee Byung-chul came from a wealthy landowning family in the south of the country. He first opened a rice mill before moving to the textile-making city of Daegu in the late 1930s to launch Samsung (the name means “Three Stars”) as a trucking and real estate business, which swiftly went bankrupt.
But Lee thrived during the Japanese occupation and afterwards, first as a trader in fish, noodles, dried fruit and other necessities, and later as a manufacturer in textiles, sugar, cement and fertilisers, as an investor in banks and insurance companies – and as a close connection of the emergent nation’s political leaders in the 1950s and 1960s.
Samsung Electronics, founded in 1969, benefited from Lee senior’s links with the Japanese companies that then dominated the consumer electronics market. Samsung began to emerge as a mass producer of cheap televisions, VCRS, fridges and microwaves – until Lee Kun-hee, Byung-chul’s chosen heir despite being his third son, took the reins after his father’s death in 1987 and set out to build a new reputation for quality that would match and eventually outpace the likes of Sony of Japan.
He was also determined to change Samsung’s culture towards a more international outlook, famously telling managers to “change everything but your wife and kids” – and promoting them on merit rather than (as Korean tradition demanded) as a matter of seniority within a rigid hierarchy. He was said on one occasion to have ordered a bonfire of Samsung products that he regarded as substandard. “A heightened sense of crisis”, rather than complacency, was another of his demands.
It was his decision to focus Samsung’s research and manufacturing capacity on memory chips and other digital innovations (areas in which the Japanese began to fall behind in the 1990s) that brought Samsung into the front rank of global technology companies. Its Galaxy phones – though not without problems of overheating and faulty batteries – became market leaders, while the company also produced components for iphone and Android models.
The wider Samsung industrial empire grew to account for around a fifth of South Korea’s GDP and a quarter of its stock market capitalisation, employing some 230,000 people. Its electronics division alone generated more than $200 billion of annual revenues.
Not all Lee Kun-hee’s ventures thrived – there was a failed diversion into car making – but the Samsung brand marched relentlessly ahead under his imperious and at times reclusive command, and despite a personal reputation marred by successive episodes of controversy.
In 1996, Lee was convicted of bribing President Roh Tae-woo but pardoned by Roh’s successor; separately, recordings were published of Lee discussing plans to bribe other presidential candidates.
Then in 2008 – when the political and economic reach of chaebol groups was under increasing public scrutiny – he was found guilty of a catalogue of financial wrongdoings, including tax evasion, and handed a three-year suspended sentence plus a large fine.
He accepted responsibility and stood down from the chairmanship of Samsung, but was again accorded a presidential pardon – with the express wish that he should could continue his involvement with the International Olympic Committee that would bring the 2018 Winter Olympics to Pyeongchang in South Korea, with Samsung as a major sponsor.
Some reports claimed that the pardon itself was the result of yet more bribes, but it enabled Lee to return to the helm of Samsung – until he was incapacitated by a heart attack in 2014, spending his remaining years in a coma.
Lee Kun-hee was born in the city of Daegu on January 9 1942. He studied, as his father had done, at Waseda University in Tokyo and embarked on (but did not complete) a master’s degree at George Washington University in Washington before joining Samsung in 1966, making his way upwards in its construction and trading businesses.
Lee’s fortune was estimated at $21 billion. He was sued in 2012 by two older siblings over Samsung shareholdings they claimed their father had willed to them, but the case was dismissed. Further tussles are anticipated with the family and tax authorities over his estate.
Lee Kun-hee is survived by his wife Hong Rah-hee, the daughter of a newspaper tycoon, and by their son Lee Jae-yong and two surviving daughters, a third daughter having predeceased him.
Lee Jae-yong (known internationally as Jay Y Lee) became de facto head of Samsung after his father’s heart attack. He was convicted in 2017 of bribing President Park Geun-hye and served some months in prison before his sentence was suspended; the case is currently being retried but he is widely expected to be confirmed as chairman. Lee’s eldest daughter Lee Boo-jin is president of Samsung’s Shilla hotel group.