Lawrence GashSamsung’s Vice-Chairman and de-facto leader Lee Jae-yong could be heading back to prison following a ruling from South Korea’s Supreme Court, the New York Time reported on August 29.
This news has done nothing to allay yesterday’s fall in the KOSPI Index. The KOSPI ended the day down 0.40% or 7.68 points at 1,933.41.
Samsung Group affiliates stocks fell following the news, 12 of the 15 listed Samsung companies ended the day lower. Samsung Electronics and Samsung BioLogics dropped 1.7% and 4.9% respectively.
President Park was driven from office in 2017 and is currently serving a 25-year sentence for bribery. Mr Lee found guilty of offering bribes of $3 million to the now-disgraced former leader, his five-year sentence was halved on appeal and he only served one year in total.
The Supreme Court has found that Lee actually offered bribes upwards of $7 million and that the Appeals Court must now rule on his case again.
Mr Lee is the son of longstanding Samsung chairman Lee Kun-hee, who is seriously ill. If he is found guilty of embezzling $4 million from Samsung for bribery purposes then he could face 5 years in prison. In South Korea, a term of more than 3 years cannot be suspended.
Samsung is a key player in the country’s economy. Its largest subdivision, Samsung Electronics, has a global market cap of $272.4 billion. In a statement on Thursday, the company expressed its regret over the episode and promised to “avoid a recurrence of past mistakes.”
The family-owned conglomerate is facing growing competition, particularly in its Asian market where Chinese smartphone brands such as Huawei are spreading and improving in quality.
The company’s operating profit from April to May 2019 fell by more than half compared with the year before.
