Paroled for financial crimes, Samsung heir apologizes for causing public 'concern' - MarketWatch
SEOUL, South Korea — Embattled Samsung leader Lee Jae-yong apologized for causing public concern upon being paroled from prison Friday with a year left on his sentence for crimes related to the explosive corruption scandal that toppled South Korea’s previous president.
His release at 10 a.m. from a prison near the capital makes Lee just the latest in a long line of South Korean corporate bosses receiving lenient punishment for corruption and financial crimes.
Wearing a gray suit and a mask, Lee stepped out of the prison gates in Uiwang to a barrage of camera flashes. Hundreds of demonstrators standing behind police lines simultaneously shouted slogans denouncing or welcoming his release.
“(I) caused too much concern to our people. I am very sorry,” Lee said before bowing. He added that he was keeping close attention to the “concerns, criticism and huge expectations” about him and then walked into a black sedan without answering reporters’ questions.
Lee, 53, served a total of 18 months of a 30-month sentence for embezzling millions of dollars from corporate funds to bribe South Korea’s previous president, Park Geun-hye, to ensure government support for a 2015 merger between two Samsung affiliates that tightened his control over the corporate empire.
His case was part of a massive corruption scandal that triggered nationwide protests and led to the impeachment and ouster of Park, who has been jailed since 2017 and won’t be released until 2039 if she fully serves her term.
Even with his release, Lee isn’t out of the legal woods. He appeared at the Seoul Central District Court on Thursday for another trial over alleged stock price manipulation, auditing violations and other financial crimes related to the 2015 merger. His lawyers have insisted the allegations in that case were not criminal acts but were normal business activities.
In including Lee among some 800 prisoners who were granted paroles ahead of Sunday’s Liberation Day, which celebrates Korea’s independence from Japanese colonial rule at the end of World War II, Justice Ministry cited unspecified economic concerns related to the pandemic and global markets.
The decision marked an about-face for the government of President Moon Jae-in, who after winning the presidential by-election in 2017 pledged to curb the excesses of “chaebol,” or South Korea’s family-owned conglomerates, and end their cozy ties with the government.
Lee is the third-generation leader of the Samsung business group that was founded by his grandfather. He runs the conglomerate in his capacity as vice chairman of Samsung Electronics 005930, -3.38% , one of the world’s biggest makers of computer memory chips and smartphones.
Lee was originally sentenced in 2017 to five years in prison on the corruption charges but was freed after 11 months in February 2018 following a Seoul High Court ruling that reduced his term to 2½ years and suspended his sentence, overturning key convictions and reducing the amount of his bribes.
The Supreme Court returned the case to the high court in 2019, ruling that the amount of Lee’s bribes had been undervalued. Lee was jailed again in January this year following a retrial.
Almost no one had expected Lee to serve his full sentence through July 2022. Business leaders and key members of Moon’s government had endorsed Lee’s early release in recent months, citing Samsung’s crucial presence in the national economy and the increasing challenges it faces in the global semiconductor market.
Recent polls have indicated South Korea’s public — years removed from the angry protests that filled the streets with millions of demonstrators in 2016 and 2017 — largely favors Lee’s release, showing Samsung’s deep influence in the country.
After avoiding the issue for months, Moon signaled a step change in May when he told reporters that his government will consider both the intensifying competition in the semiconductor sector and public feelings about fairness before deciding whether to grant Lee an early release.
But in the face of criticism by civic groups and progressive politicians that it abandoned chaebol reforms and revived a tradition of preferential treatment for convicted tycoons, Moon’s office has distanced itself from Lee’s release, saying paroles are up to the Justice Ministry.
Justice Minister Park Beom-kye, who announced Lee’s release on television, claimed to reporters on Wednesday that he wasn’t personally involved in the process of selecting parole candidates, although he had the authority to approve or deny the release of prisoners proposed by the ministry’s parole committee.
While it’s clear Lee has always been in control of Samsung regardless of whether he was in the boardroom or a prison cell, it’s unclear how quickly he could formally resume his management role. He would need the Justice Minister to officially approve his return to work as the law bans people convicted for major financial crimes from returning to work for five years after their release. He is widely expected to get that approval.
Samsung showed no obvious sign of trouble while Lee stayed in prison, relaying his business decisions through visiting company executives. It has reported robust profit during the coronavirus pandemic, seeing larger demands for its consumer electronics products and chips used in computing devices and servers as the virus forced millions to stay at home.
But there were also views that Lee’s prison term compromised Samsung’s speed in major investments when it needs to spend aggressively to stay competitive in semiconductors and other technologies.
While Samsung remains dominant in memory chips, which are used to store information, there are views that it is increasingly falling behind rival Taiwan Semiconductor Manufacturing Co. 2330, -0.85% in the race for high-tech chips designed to perform a broader range of functions.
The demand for advanced chips is expected to grow rapidly in the coming years, driven by 5G wireless services, artificial intelligence and self-driving cars. Some analysts say Samsung will become more active in pursing merger and acquisition deals to gain such technologies as Lee will be able to sign off on investments more easily.