Samsung heir convicted of bribery: Company's future at stake

Friday, 25 Aug, 2017

Lee's five-year sentence is one of the longest prison terms given to a South Korean business leader.

Lee, the third generation of the Samsung family, was seen by prosecutors as paying, or promising to pay, a total of 43.3 billion won (38.4 million US dollars) in bribes to the ousted president and her longtime confidante Choi Soon-sil who is taken into custody and standing trial for the influence-peddling scandal.

Central to the trial was a proposed merger of two Samsung Group subsidiaries for which, according to prosecutors, Lee had sought government approval in exchange for the bribes.

Lee, 49, was accused of offering $38m in bribes to four entities controlled by Choi Soon-sil, a friend of Park. Lee has denied any wrongdoing, and his lawyers said Friday they reject the court's decision and will appeal immediately.

"The entire guilty verdict is unacceptable", Song said, adding he was confident his client's innocence would be affirmed by a higher court.

For those of you who do not know, Lee Jae-yong took over control of Samsung after his father suffered a heart attack, which was back in 2014. Park Geun-hye is the daughter of the former South Korean dictator and was the first female president of the country.

Despite Lee's absence Samsung Electronics has reported stellar profits in recent months, sending its share price soaring, thanks to booming demand for its memory chips used in computers, servers and mobile gadgets. The company also fears that if Lee is convicted by the Supreme Court, he may fall under the Foreign Corrupt Practices Act in the United States, which could make Samsung Electronics face colossal losses from contract cancellations and penalty payment among others.

Five years is a lengthy sentence, but prosecutors had asked for Lee to serve 12 years behind bars.

Jay Y. Lee, whose father is in ill health at the moment, was expected to replace him as the chairman following his passing. Well, He was guilty of bribery and other offences in connection with the scandal that brought down South Korean president Park Geun-Hye.

They said Lee was aware that Park, president at the time, wanted Samsung to sponsor the equestrian training. That followed a 1996 conviction for bribing ex-president Roh Tae Woo that resulted in a two-year suspended prison sentence and subsequent pardon.

Samsung made the biggest contributions of $16.8m to Choi's foundations.

Analysts differ on the potential impact of the verdict and sentence on Samsung.