April 19, 2024

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[THE INVESTOR] After South Korea’s Constitutional Court’s decision on Mar. 10 to uphold the impeachment of former President Park Geun-hye, the case involving arrested Samsung Electronics Vice Chairman Lee Jae-yong may take a new turn, experts and industry watchers said. 

In the historic ruling that immediately stripped Park of her power, acting Chief Justice Lee Jung-mi said, “President Park’s direct and indirect support in the establishment of the Mir and K-Sports foundations violated the companies’ property rights and autonomy in management,” referring to the nation’s major conglomerates who were found to have donated billions of won to the organizations in question.

The Constitutional Court’s ruling may work in favor of the businesses including Samsung by reinforcing their depiction as “victims” of political pressure. However, some experts said the decision may not necessarily be beneficial to Lee and may even make it harder for his legal team to prove his innocence in his charges of bribery.

“The ruling that the president abused her power can be interpreted as that Samsung is a victim, although it is too early to predict how the ruling will affect the case,” said KAIST College of Business professor Lee Byung-tae.

Since the political scandal broke out late last year, Samsung has consistently been claiming that it “did not donate the money in return for benefits but had to give the money due to the pressure.” 

Samsung, LG, Hyundai Motor and SK declined to comment, citing the sensitivity of the issue. 

Other experts suggested the ruling might make it harder for Samsung to demonstrate Lee’s innocence.

“The verdict cannot be necessarily seen as beneficial to Lee Jae-yong because the part -- regarding Park’s pressure -- does not specifically single out Samsung,” said Lee Jong-soo, a professor at Yonsei Law School. 

This is because Lee is suspected of volunteering to financially support Park’s confidante Choi Soon-sil in return for favors regarding his managerial succession, he explained. 

The impact of the ruling on Samsung remains ambiguous as the company’s name was not mentioned, while other companies such as Hyundai Motor, Lotte, POSCO and KT were brought up once or twice. Also, the ruling did not mention “bribery.”

“Today’s ruling was based on constitutional grounds not on legal grounds. It is too early to make a hasty conclusion about the ruling. It remains to be seen, as the investigation on Samsung is not yet over,” said Jang Young-soo, a professor at Korea University Law School. 

Upon the completion of the special counsel’s investigation, the scandal has been taken up again by state prosecutors. The first hearing for Lee’s trial was held on Mar. 9. He faces charges of bribery and perjury. 

Yoon Seok-hyun, a professor at Seoul National University Business School, meanwhile, suggested the constitutional decision may bring immediate hurdles to the countries’ main businesses but may lead to long-term advantages.

“Today’s verdict signals that the nation is moving toward economic democracy and reforming corporate governance structure. ... Although this may not be beneficial to Samsung at the moment, it is more important for the nation to go in the right direction.”

By Shin Ji-hye/The Korea Herald (shinjh@heraldcorp.com)