SEOUL (AFP) – The jailed de facto leader of the giant Samsung group went on trial yesterday over a stock manipulation case that effectively puts South Korea’s system of conglomerate control in the dock.
Samsung – whose flagship subsidiary is among the world’s biggest smartphone and computer chip makers – is by far the largest of the family-controlled empires known as Chaebols that dominate business in South Korea, the world’s 12th-largest economy.
Chaebol families often have only a small ownership stake in their empires, but maintain control through complex webs of cross-shareholdings between units.
Vice-chairman of Samsung Electronics and the grandson of the group’s founder Lee Jae-yong is accused of stock manipulation, breach of trust and other offences when two other subsidiaries, Samsung C&T and Cheil Industries, merged in 2015.
Lee – who had emergency surgery for appendicitis last month, delaying the proceedings – looked gaunt in court, reports said, and wore a dark suit with a white shirt.
Lee was the largest shareholder in Cheil Industries, and critics said Samsung sought to artificially lower the price of C&T to give him a bigger stake in the merged entity – a key part of the Samsung structure – consolidating his grip on the conglomerate ahead of his father’s death last year.
His lawyers have previously said that everything he did in connection with the merger was legal.
Lee is already serving a two-and-a-half year prison sentence for bribery, embezzlement and other offences in connection with the corruption scandal that brought down ex-South Korean president Park Geun-hye.
Samsung is crucial to South Korea’s economic health, and is active in sectors ranging from construction to healthcare to insurance.
But professor of Korean Studies Vladimir Tikhonov at the University of Oslo told AFP, “The most problematic aspect is the attempted continuation of the unchallenged dynastic rule over a company which is responsible over 20 per cent of South Korea’s gross domestic product.