Court upholds Samsung heir’s guilty verdict but lets him walk free
The invulnerability of business leaders, contrasted with the vulnerability of political ones, indicates that even the reformist Moon administration remains wary of taking on the big Korean corporations.
Lee Jae-yong, heir to the Samsung conglomerate, walked free on Monday following an appeals court dilution of his five-year sentence in a case that was central to last year’s overthrow of ex-President Park Geun-hye.
Lee, the de facto head of Korea’s biggest company, Samsung Electronics and grandson of the corporation’s founder, was jailed for five years last August by Seoul Central District Court. Charges included providing some US$7million to fund the equestrian career of the daughter of Choi Soon-sil, Park’s crony, and for hiding assets overseas, embezzlement and perjury.
The court found that Lee expected to receive favorable treatment from regulators as he attempted to assert control over Samsung and last year’s judgment was hailed as a landmark in the Korean judiciary’s treatment of high-profile corporate criminals.
Former President Park was impeached last March after the Constitutional Court found her guilty of corruption and permitting the unelected Choi to wield influence. The jailed ex-president is now facing multiple criminal charges.
On Monday, Seoul High Court slashed Lee’s sentence to two and a half years and also suspended it. The court said Lee had been “forced” to offer Park bribes and there was “no evidence” that the Samsung heir demanded policy favors in return, AFP reported.
Even so, the suspended sentence does not mean Lee is now no longer guilty. The court still found him to have offered some US$3.3 million worth of bribes and he remains a convicted felon who will need to remain crime free for the next two and a half years. However, he will not be under police surveillance and is free to continue his career at the head of Samsung Electronics.
“I want to say once again how sorry I am that I have failed to present a good image of myself,” Lee said as he left prison, according to agencies. “The past year has been a valuable time for me to reflect upon myself. I will be more careful in the future.”
Lee added that he would visit his father, Samsung Chairman Lee Kun-hee, in hospital. He is currently on life support in hospital, after suffering a stroke in 2014 and is not expected to recover.
Another legal duel is likely. Samsung lawyers will reportedly take Lee Jae-yong’s case to the Supreme Court to clear his name while prosecutors may also appeal. Alternatively, Lee may receive a presidential pardon, as his father did.
One of the key platforms of the Moon Jae-in administration, that took power after the impeachment of Park, is corporate reform – a reflection of the disgust many Koreans feel for the consistent power abuse and corruption involving the chaebol, the giant family run conglomerates that dominate the Korean economy. However, while the government has appointed several anti-chaebol figures to powerful positions in the administration, it cannot – at least publicly – influence the judiciary.
I don’t think it matters who the president is, the judicial system has its own logic and I think the system is very flawed,” said Mike Breen, Seoul-based author of ‘The Koreans.” “Lee was portrayed as a key criminal in the downfall of a president impeached for the corruption, but the fact that he gets such a mild sentence means his offense must have been minor, and this, in turn, casts doubt on the fairness of the whole impeachment process.”
Business leaders unaccountable; political leaders over-accountable?
The ruling will surprise nobody who follows the mild judicial misfortunes of Korea’s corporate aristocracy. Chaebol “royal family” members are consistently given lenient sentencing or have their sentences overturned on appeal or via presidential pardon. Lee Kun-hee was twice given suspended sentences for corporate crimes, so served no jail time, and was also handed a presidential pardon.
In the past, Korean judges have been lenient toward chaebol chairmen on the basis of their importance to the national economy. In Lee Jay-yong’s case, this was a difficult point to make. Having overseen the bankruptcy of his first business, E-Samsung, he then took the role of the group’s key “relationship manager” when Apple attacked Samsung with a billion-dollar lawsuit. Claims that he has been a successful leader are questionable. Moreover, Samsung’s stock price has hit all-times highs during Lee’s time in jail.
Even so, the contribution that the chaebol structure makes to Korea’s economy and society cannot be overstated. In addition to their business role, they support sports teams and art and culture centers, provide generous advertising budgets to media and even contribute to national events such as Olympiads.
Customarily, the judiciary has taken note.
“Korean courts consider the defendant’s contribution to the national economy as a mitigating factor,” said author Breen. “So they give lighter sentences to businessmen than politicians.”
This year, domestic media have reported that Samsung is not hiring the large numbers of graduates they have in the past. With youth unemployment a serious social and political issue in Korea, this news may have been impactful.
Monday’s result does not mean that impeached and imprisoned Ex-president Park will receive a similarly favorable ruling. In fact, her predicament looks graver than ever. “Park Geun-hye and Choi Soon-sil should be seen as the main players in this scandal,” said one of the judges during the ruling on Lee’s case, according to AFP.
While Korea’s powerful business heads customarily escape scandals with light or no punishment, the country’s ex-presidents have, since democratization in 1987, all faced sticky entanglements after leaving office.
For their roles in a coup and a civilian massacre, Chun Do-hwan was sentenced to death while Roh Tae-woo was sentenced to life imprisonment. However both were subsequently granted presidential pardons. Family members of Kim Young-sam, Kim Dae-jung and Lee Myung-bak served jail time for corruption scandals. Roh Moo-hyun committed suicide when the succeeding administration started investigating his family members for corruption. And Lee Myung-bak is now facing retroactive legal difficulties.
Park Geun-hye has been detained since her arrest in March 2017 while Choi and many of Park’s ex-cabinet members and allies are also in jail. If found guilty of extorting bribes, Park could spend the rest of her life behind bars.
In an interview with Reuters in 2017, President Moon Jae-in said: “When Lee was taken into custody, the share prices of Samsung went up. If we were to succeed in reforming the running of the chaebols and also increasing transparency, I believe this will not only help the economic power of Korea but also help to make the chaebols themselves more competitive.”
But with presidents being limited to a single five-year term while a chaebol hands power down through the generations, the staying power of the corporate sector is clear.
“I think what is going on is that Samsung have been waging a media campaign to win sympathy and to show their contribution to society,” said Geoff Cain, author of an upcoming book on Samsung.
The apparent invulnerability of business leaders, when contrasted with the vulnerability of political leaders, indicates that even the reformist Moon administration will be wary of taking on the might of big business.