April 18, 2024

• 

[THE INVESTOR] A fierce legal dispute is expected to extend this week over the Seoul Central District Court’s decision to sentence Samsung Electronics’ de facto leader Lee Jae-yong to a five-year prison term.

Denouncing the judgment as “unacceptable,” Lee‘s attorneys are bracing to lodge an immediate appeal, plausibly within the week, to refute the key charges connecting Lee to the corruption scandal pivoting on former President Park Geun-hye.

During the first weekend following the court ruling on Aug. 25 that found the Samsung heir guilty of five major charges -- bribery, embezzlement, concealment of criminal proceeds, illegal transfer of assets overseas and perjury -- Lee‘s legal representation and the special counsel team respectively clenched their fists for the forthcoming appellate trial.

Lee‘s attorneys, on the other hand, referred to the court decision as “unacceptable” and gestured at filing an appeal as soon as possible.

The investigators, who previously had demanded for a 12-year jail term on the conglomerate chief, viewed Friday’s ruling skeptically and vowed to seek for a more severe penalty in the appeals court. It is likely that the probe team will focus on overturning the lower court’s judgement on three charges that Lee was found “partially guilty of.”

Lee’s key charges include Samsung‘s sponsorship for Chung Yoo-ra, equestrian daughter of Park‘s scandal-ridden confidante Choi Soon-sil, illegal transfer of the company’s assets overseas and concealment of criminal acts. 

Refuting the court’s ruling that downsized the amount of money (8.9 billion won or $7.9 million) that was recognized as bribes, the prosecutors are expected to argue that the entire 43.3 billion won was offered as donations in return for favors from the ex-president.

The special counsel tea is also likely to again accuse Lee of donating 20.4 billion won to the Mir Foundation and K-Sports Foundation led by Choi Soon-sil, which the court issued an acquittal.

If the total amount is recognized as bribes, the minimum sentence must be 10 years in jail, according to the prosecutors. 

On the other hand, Lee’s legal representatives from the country’s most powerful law firms, are predicted to take issue with the court’s grounds for the conviction judgement, defined as “asking for implied favors.” 

“Since there is no specific definition of such conception, there should be some logic or evidence supporting it,” said a source from the legal circles.

Meanwhile, Samsung‘s governance restructuring plans are also expected to reel under its leader’s imprisonment and the consequent suspension of major investment projects.

Last year, before the vice chairman was detained, Samsung unveiled plans to transform Samsung Life Insurance into a financial holding company and separate Samsung Electronics into an operating company and a holding company. In the end, the two holding firms were supposed to be incorporated later, under Lee’s leadership. 

Considering that the court’s decision on relevance of the restructuring moves to Lee’s inheritance, the rest of the plans are expected to be delayed and make major Samsung operations rely on management specialists, like current CEOs of Samsung Electronics’ each business division.

“Samsung Electronics Vice Chairman Kwon Oh-hyun is expected to contribute to minimizing the leadership vacuum for the time being,” said an official from the business community.

Kwon is currently leading the semiconductor division, the most profitable business of the electronics unit. He has been spearheading the Samsung affiliates since Lee was detained in February.

Some business observers predicted, however, that Lee‘s grip over the management may continue, regardless of his imprisonment, as for the past six months he spent in custody. During this period, the company smoothly disbanded the former future strategy office and announced about a 30 trillion won investment plan for the chipmaking business.

By Song Su-hyun/The Korea Herald (song@heraldcorp.com)