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THE INVESTOR
September 21, 2019
Big Reunion

Samsung

Supreme Court ruling casts shadow over Samsung

  • PUBLISHED :August 29, 2019 - 16:37
  • UPDATED :August 29, 2019 - 16:40
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South Korea’s Supreme Court on Aug. 29 ordered a lower court to review its previous decision to hand down a suspended jail sentence to Samsung Electronics Vice Chairman Lee Jae-yong.

The rejection of the lower court’s ruling could deal a blow to Samsung as the tech giant could again suffer from a leadership vacuum if Lee, who is now on probation, is put in jail.




Lee was convicted of having bribed former President Park Geun-hye and her confidante Choi Soon-sil in return for favors in the transition of management control from his bedridden father, Samsung Chairman Lee Kun-hee.

The junior Lee was sentenced to five years in prison for bribery and embezzlement in 2017. He served about a year of that sentence before the appeals court cut his term to 2 1/2 years, suspended for four years, in 2018.

The appeals court ruled that there was not enough evidence to prove that some of Samsung’s support for Choi was linked to the tech giant’s management transition plans.

Rejecting the 2018 ruling, however, the Supreme Court judged that three horses worth 3.4 billion won ($2.8 million), gifted by Samsung to Choi’s daughter, equestrian Jung Yoo-ra, constituted bribes for Park and Choi. In addition, the court found that 1.6 billion won Samsung provided to a sports foundation run by Choi and her aides also constituted a bribe.

Under the current law, suspended sentences in embezzlement cases can be handed down only if the amount does not exceed 5 billion won.

Because of the latest court decision, the Samsung vice chairman will likely receive a harsher sentence and may have to go back to jail.

In response to the court ruling, Korean business organizations have expressed regret over the resulting uncertainties.

“The business segment is facing a number of challenges, including the US-China trade war and South Korea’s trade conflict with Japan,” said the Federation of Korean Industries in a statement. “The latest ruling could hamper the operations of Samsung and the growth of the nation’s economy.”

In a separate statement of its own, Samsung apologized over the concerns it had caused.

“Samsung will try not to repeat its past mistakes, and continue to do the utmost efforts to run its businesses in a responsible manner,” the tech giant said.

By Kim Young-won (wone0102@heraldcorp.com)

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