Back in February, we reported on the arrest of Lee Jae-yong, the 49-year-old heir to the Samsung fortune. On Friday, February 17, a South Korean court arrested and jailed the billionaire son of Samsung chair, Lee Kun-hee. Now, a South Korean court has sentenced Lee Jae-yong to five years in prison for crimes that helped bring down the country's president.
On Friday August 25th, Lee Jae-yong was found guilty of offering bribes to former South Korean President Park Guen-hye as well as to Park's close friend Choi Soon-sil in exchange for government favors for Samsung. Samsung donated nearly $70 million to two charities controlled by Choi Soon-sil. The company also transferred millions to a German company of Choi's that financed her daughter's equestrian training and her niece's winter sports center. The resulting outrage led to Park's removal as President. Lee was also found guilty of embezzling money from Samsung, hiding assets oversees, concealing profit from criminal activities, and perjury.
"The essence of the case is unethical collusion between political power and capital," the court said in a statement. It led the public to fundamentally question the public nature of the president's work and to have "mistrust in the morality of the Samsung group," it said.
Chung Sung-Jun/Getty Images
Samsung is set to report its highest-ever earnings this year. Samsung accounts for one fifth of South Korea's exports. Some analysts worry that Lee's absence from the executive offices could take a toll on the economy the country. It is expected that without Lee at the helm, long term business plans and growth may have to be put on hold. It is also possible that Lee's arrest and prison term could cause a feud over the family fortune when the elder Lee dies.
During the trial, Lee continued to maintain his innocence. He claimed to be unaware of the bribes and unethical donations, instead putting the blame on other executives.
This verdict has been closely watched due to the political scandal that resulted in the removal of Park and the arrests of Choi and Lee. Park and Choi are both currently on trial. Other Samsung executives that were charged with Lee were also found guilty.
Lee's verdict can be appealed twice under South Korean law. Samsung will appeal the ruling immediately.
