LEE VERDICT MAY NOT MATTER MUCH TO SAMSUNG
Billionaire heir not really involved in making decisions, court told
SEOUL
DURING the months-long corruption trial of Lee Jae-yong, the billionaire heir to Samsung Group and his former deputies testified that he wasn’t really involved in making decisions at South Korea’s biggest conglomerate.
That may help him prove he’s not a criminal, but could also hurt his reputation as a manager for the family-run business that helped rebuild the nation in the aftermath of war.
Since Lee was arrested in February, Samsung Electronics Co posted record net income and released the Galaxy S8 smartphone to critical and commercial success. Semiconductor sales are booming, shares reached an alltime high and it has just unveiled the new Note 8 device.
So does it really matter to the company if a judge convicts Lee today and sends him to prison for as many as 12 years?
“Lee was penny-wise and pound-foolish,” said Kwon Young-june, a professor who researches corporate governance at Kyung Hee University.
“In trying to clear himself of legal responsibilities, Lee has portrayed himself as someone incompetent and without any vision.”
Prosecutors accused Lee of bribery, embezzlement and hiding assets overseas as part of an influence-peddling scandal that led to President Park Geun-hye’s ouster.
The alleged scheme was intended to gain presidential support for a 2015 merger between two affiliates that increased Lee’s sway over Samsung Electronics, while owning just a minority of its shares, said prosecutors. Samsung and Lee have denied the charges and said the deal was to boost business competitiveness.
A three-judge panel is expected to announce a verdict for Lee today. Prosecutors are seeking a 12-year prison sentence for South Korea’s most powerful businessman.
Perhaps the most persuasive argument that Samsung can be successful without Lee may have been made by the man himself. During riveting testimony, the 49-year-old said he knew little about Samsung affiliates other than the electronics business.
“There was no line of approval involving me,” Lee said. “I had no knowledge to make decisions, nor the competence.”
Lee said former Samsung Electronics chief executive officer Choi Gee-sung was in charge of major issues at the conglomerate and the two “shared information”. He referred to Choi as his mentor.
Lee said he never participated in meetings at the now-defunct corporate strategy office led by Choi, and he never met alone with the leader of a Samsung affiliate other than the electronics unit.
He said he was “coached” by Choi to make that announcement. Lee was rebutting accusations he must have been powerful enough to unilaterally dissolve the most powerful Samsung office.
In Lee’s defence, former Samsung Electronics executives testified that the company had professional managers running divisions and Lee was only tangentially involved.
“Regardless of the outcome, the facts demonstrate a clear lack of leadership and taking responsibility,” said Thomas Cooke, professor at Georgetown University’s McDonough School of Business.
Lime Asset Management Co chief executive officer Won JongJun said: “Guilty or not guilty, it’ll have almost little effect on the company at least in the short term.”
Meanwhile, Samsung unveiled the Galaxy Note 8 in New York yesterday as it seeks to leave behind the debacle over exploding batteries in the previous generation of the device, and mount a renewed challenge to Apple and its soon-to-come iPhone 8. Bloomberg