Samsung’s Lee fights back siblings
SEOUL: During his long and controversial career, Samsung Electronics Co chairman Lee Kun Hee has transformed his family’s dried-fish and produce company into the world’s biggest maker of TVs and mobile phones, challenging Apple Inc and Sony Corp in the process. Now he must contend with feuding siblings.
Billionaire Lee, 70 years old and South Korea’s wealthiest citizen, is facing down lawsuits that his older brother and sister are waging in an attempt to win a slice of the family wealth.
Lee Byung Chul founded what is today South Korea’s biggest business group in 1938 and died in 1987 without leaving a will, casting a shadow over the giant company’s otherwise promising future.
The siblings’ demand for at least an US$850mil stake in the group that generates about 20% of South Korea’s gross domestic product threatens to be a costly distraction at a time of intense industry competition. The civil trial started yesterday.
“He has grown Samsung to the point where (South) Korea is called ‘Republic of Samsung’,” said Park Hyun Goon, author of Lee Kun Hee’s Agony, a book about Samsung succession published this year. “How would it make him feel if a share of that is taken away by his siblings or if his company goes down?”
The rancor comes as Samsung challenges Apple, its biggest customer and its adversary in patent lawsuits on four continents, after selling one of almost every four mobile phones in the first quarter. Samsung earned 7.64% of its revenue from selling chips, displays and other products to the iPhone maker.
At the same time, over 30 cases concerning patents and design are pending from Paris to San Francisco between the two companies, which traded leadership positions in the US$219bil global smartphone market in the past three quarters.
Samsung ended Nokia’s 14-year run as the global leader in mobile phones last quarter. Samsung shipped 93.5 million handsets of all kinds, compared with 82.7 million for Nokia, researcher Strategy Analytics said last month. Apple ranked third.
“The risk of losing your edge during these times is real,” Matt Walker, senior analyst at market researcher Ovum, said in an email. “Companies that are driven by innovation, as Samsung should be, can’t afford much downtime to deal with this kind of turbulence.”
The family feud drags Lee, a lung cancer survivor, back into a courtroom following a series of earlier run-ins with the law. He was convicted of paying bribes to former presidents Chun Doo Hwan and Roh Tae Woo in 1996 before receiving a pardon from then-president Kim Young Sam a year later.
Lee quit as chairman of the group and electronics company in 2008 after being charged with tax evasion. He received another presidential pardon in 2009 and reassumed his post running Samsung in 2010.
“Ironically, the biggest risk to Samsung’s corporate governance is Lee Kun Hee himself,” said Chae Yi Bai, a researcher at the Centre for Good Corporate Governance. “The family dispute again highlights this inherent problem of Samsung.” — Bloomberg