Trial of Samsung heir focuses on father-to-son succession

Trial of Samsung heir focuses on father-to-son succession

SEOUL, Korea, Republic Of — The scion of South Korea’s Samsung business empire, Lee Jae-yong, appeared in court Friday to face trial for bribery and other charges.

Lee sat quietly and did not speak as South Korean prosecutors presented a slew of evidence they said showed why and how the 48-year-old used 43 billion won ($38 million) in corporate funds to bribe the country’s impeached president, Park Geun-hye, and a close confidante of hers, mainly in exchange for supporting a smooth leadership transition at Samsung.

The prosecutors focused on Lee’s alleged motivation for seeking government help with a father-to-son leadership transition in the country’s largest business group.

Samsung has denied any wrongdoing and Lee, who was arrested in February, has pleaded not guilty.

Lee assumed de facto leadership of the conglomerate after his father Lee Kun-hee, who is Samsung Electronics’ chairman, fell sick in May 2014.

Stakes in the trial are high for both sides, since it involves the princeling of South Korea’s richest family.

Prosecutors blamed close ties between the government and big business for the scandal that toppled Park and has implicated dozens of other people at a number of chaebol, or big business conglomerates.

Such relations may have aided South Korea’s rapid economic ascent but now are a source of growing public discontent and a key target of contenders in a May 9 snap presidential election.

For Samsung, a conviction could hurt Lee’s stature as future leader of the company founded by his grandfather.

The prosecutors said their evidence includes 39 handwritten notebooks where a former economic adviser of the impeached South Korean president scribbled down her orders. They argued that the huge sum of corporate money was used for Lee’s personal benefit — to secure a business merger and lobby regulators to help strengthen his control over Samsung.

Lee is “the biggest beneficiary who reaped enormous profits,” said special prosecutor Yang Jae-sik, according to a media pool report. Yang denied Lee’s argument that Samsung was coerced into giving Park and Choi money, saying the victims of the dealings were national pension fund holders, affiliates of Samsung and its shareholders, who suffered losses due to a merger allegedly engineered for Lee’s sake.

Lee faces five charges that could entail at least five years in prison if he is found guilty. A ruling is expected by late May.

One of his lawyers, Song Woo-chul, presented about 70 slides in a presentation, contending the prosecutors’ argument was unreal and “full of contradictions.”

Song said Samsung was unaware of Park’s friend, Choi Soon-sil, until after the scandal over their relationship and allegations of influence-peddling surfaced late last year. Samsung did not need Park’s help with the 2015 merger, which was aimed at helping Samsung’s future growth, not aiding the leadership succession, Song contended.

“Prosecutors argue that Lee Jae-yong needed to take excessive measures for the leadership succession due to the sudden illness of Chairman Lee Kun-hee. But there was no such need,” Song said.

Even as the Samsung de facto leader and four other executives face corruption charges, the latest earnings preview showed the company’s business is thriving.

Samsung Electronics, the world’s largest maker of smartphones and display panels, said Friday is expecting its best quarterly profit in more than three years thanks to the booming memory chip business.

The company’s stock is trading near historic highs, despite Lee’s troubles and the scrapping last year of its flagship Galaxy Note 7 smartphone due to fire-prone batteries.

Samsung’s January-March operating income rose 48 per cent to 9.9 trillion won ($8.8 billion), from 6.7 trillion won a year earlier. The result was higher than the market expectations.

Samsung is due to give more details of its financial results later this month. Last week, it presented and began taking preorders for its Galaxy S8, its first major smartphone launch since the fire-prone Galaxy Note 7 fiasco.


Lee can be reached on Twitter:

Youkyung Lee, The Associated Press

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