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Samsung just can’t leave South Korea’s worst influence-peddling scandal behind

Jane Li
Samsung heir Jay Y. Lee

The worst nightmare of Lee Jae-yong, the vice chairman and de facto heir of Samsung, has returned with a vengeance.

South Korea’s supreme court today (Aug. 29) ordered a lower court to hold a retrial of Lee’s bribery charges, reviving the possibility of the 51-year-old going back to prison. In 2017, Lee, a member of Samsung’s founding family, was sentenced to five years in prison after being convicted of paying millions of dollars in bribes to Choi Soon-sil, a close confidante of former president Park Geun-hye, in order to curry favor for a merger between two Samsung affiliates.

Lee was released in February 2018 by the Seoul High Court following an appeal, after the court halved and suspended his sentence.

The new ruling couldn’t have come at a worse time for Samsung. The company is currently entangled in an escalating trade fight between South Korea and Japan, and has suffered from export controls imposed by Japan on Korea last month on some rare chemicals that are crucial for the production of memory chips and phone displays—two major pillars of the company’s business.

“It means the possibility of sending Lee back to prison has risen,” Park Ju-gun, president at corporate research firm CEOScore in Seoul, told Bloomberg before the ruling. For Samsung, “not only the governance restructuring but also major business decisions will be stopped.”

Samsung said in a statement that it deeply regrets that the case “has created concerns across the society.” It added, “We will renew our commitment to carrying out the role of a responsible corporate citizen and will avoid a recurrence of past mistakes.”

The bribery scandal that embroiled not only Samsung, but many other of Korea’s biggest companies, was part of the mammoth influence-peddling scandal that eventually brought down former president Park following months of sustained protests. Park was sentenced to 25 years in prison in 2018 for bribery, extortion, abuse of power, and other charges, while Choi was given 20 years for abuse of power, bribery, and interfering in government business. Choi reportedly held a cult-like grip over the former president, and colluded with her to receive donations totally 77.4 billion won ($63 million) from Korean companies including Samsung.

Today’s decision by the supreme court focused on three horses that were given to Choi by Lee, worth 3.4 billion won. The judge said that the animals could be considered as bribes, refuting an earlier decision by the Seoul high court that excluded them as bribes, according to news agency Yonhap. Additionally, the judge said a 1.6 billion won donation from Samsung to a sports foundation run by the Choi family were bribes from Lee in order to secure government support for his succession at Samsung.

The supreme court today also sent back Park and Choi’s cases to a lower court for review, saying there were errors in the previous rulings.

 

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