Exploding phonesare the least of Samsung ’s worries . On Thursday nighttime , a South Korean courtformally removed the area ’s chair , Park Geun - hye , from position . The removal came four month after a corruption scandal rocked the foundation of not just the South Korean government , but also the commonwealth ’s magnanimous company .
Last calendar month , Samsung ’s de - facto leader , Lee Jae - yong — know as Jay Y. Lee in the westerly earth — wasarrested by South Koreanofficials in connexion to a blockbustercorruption scandal . On Thursday , Leeformerly denied the graft chargesbrought against him and four other Samsung executives . An official run escort has n’t been put , but the results could have vast deduction for the future of Samsung and the home that controls it .
In South Korea , the chief prosecutor hassaidthat Lee ’s trial could be “ the trial of the century . ” While it might sound like the inflated tagline for a cheesy offense novel , the fount is truly outlandish — it involves interpersonal mob drama , millions of dollar in alleged bribes , anti - Semite insults , corrupt governance functionary , and even a shamanistic cult .
Before we wade into the details , however , it ’s important to know a bit about the corporate structure of Samsung in South Korea . Samsung is known as achaebol — similar to a US empire — and theentire operation , which includes Samsung Electronics , Samsung Life Insurance , andexploding stamp battery - purveyorSamsung SDI , is controlled by various members of the Lee house .
Chaebol is a with child deal in South Korea , and it ’s also beenclosely alignedwith South Korean politics for many long time . ( More on that later . ) And while Lee and his executives are technically on tryout here , the chaebol organization , in which family control is crucial , is also under the microscope . After all , this whole scandal essentially boils down to one matter : the Lee family making sure Jay Y. Lee could come through his father in run Samsung .
Technically , Samsung ’s current chairman is Lee Kun - hee , but after he suffer aheart plan of attack in 2014 , daylight - to - twenty-four hours operations were efficaciously passed on to his Word , Jay Y. Lee . The vernal Lee is known in the press as the “ Crown Prince of Samsung , ” and as the firstborn nipper and only son , he ’s been neaten to come after his father for long time .
However , the succession has n’t been without its kinks . In May 2015 , two of Samsung ’s affiliates , Cheil Industries and Samsung C&T , announcedthat they planned to unify . The bargain was crucial — combining these companies together wouldsolidify the sharesneeded to keep chronological sequence in the family .
But while a merger would be unspoilt word for the Lee family , it was n’t necessarily good for other Samsung investors . Elliott Associates , a US - ground hedging fund and Samsung C&T ’s third tumid shareholder , opposed the unification , and the troupe ’s CEO Paul Singer was publicly vital of the deal . Samsung C&T had a large bet in Samsung Electronics , one of the chaebol ’s most valuable assets ; Singer argue that Chiel Industries ’ owners — members of the Lee kin — would wind up gain pregnant ownership in Samsung Electronics for cheap .
Singer tried to take Samsung to court in Korea to stymie the amalgamation , but the courtsruled against him . So he did the distinctive activistic shareholder affair — see : themultiplecoups that once fill placewithin Yahoo — and decided to vote against it , bringing some of theother foreign investorsin along with him . The battle was nasty ; at one point , Singer had anti - semitic slurs throw at him by the South Korean insistency , promptingSamsung to issue a statement “ condemn[ing ] anti - Semitism in all its form . ”
Ultimately , the voter turnout did go in Samsung ’s favour , resulting in the successful merger between Cheil Industries and Samsung C&T. Crucially , however , this was done in partthanks to supportfrom South Korea ’s National Pension Service ( NPS ) , which hold a 9.9 percent bet in Samsung C&T and a 5 pct interest in Cheil Industries .
Here — in conclusion — is where the bribery accusations enter the picture . Allegedly , now former - South Korean President Park Geun - hye and her close confidante Choi Soon - silpressured NPSto approve the merger , thanks to the payments from Lee and others at Samsung .
As the New York Timesreportedback January :
Mr. Lee is accused of instruct Samsung foot soldier to make requital totaling 43 billion North Korean won , or $ 36 million , to the sept of Ms. Park ’s confidante , Choi Soon - sil , and to two innovation Ms. Choi keep in line in exchange for help from Ms. Park in facilitate a father - to - Word transference of possession control of Samsung .
Those so-called payoff hire all sort of form , include a $ 900,000 cavalry for Choi ’s girl . Samsunghas admittedthat it give money to Choi ’s foundation and that it provided the money for the horse , but denies being part of any actus reus . The prosecutors contend that Lee made these “ donation ” as a way to curry favour with Park , see to it the 2015 merger could go through .
In an added wrinkle , at the time of the amalgamation vote , the president of the NPS , Moon Hyung - pyo , was also South Korea ’s rector of wellness and well-being . Prosecutorsarrested Moonin December over charges that he used illegal pressure sensation to force approval on the unification .
The fib does n’t end there , however . This past December , Parkwas impeachedby sevens in a wide - ranging corruption scandal . She was formallyremoved from officeon Thursday night , and now confront deplorable charges of extortion , abuse of exponent , and graft .
From theNew York Times :
Ms. Park and Ms. Choi were incriminate of conjure to call for tenner of millions of dollars in bribes from businesses . Ms. Park was also charge of countenance Ms. Choi , who had no experience in insurance qualification , edit her speeches , install acquaintances as older authorities officials and influence state affairs from the shadows .
Those 10 of millions of dollars allegedly include fund from Lee and other executives at Samsung . ( Choi , for her part , has herown backdrop of crazy : Her former - Father-God was the leader of the Church of Eternal Life , which the Washington Posthas called“a confutative shamanistic cult . ” )
Yet even though Samsung and Lee have admitted to making the payments , securing a guilty verdict against Lee could still be unmanageable . Koh Hyun - sook , an looker-on who showed up at Lee ’s preliminary hearing on Thursday , order theNew York Times , “ There is a saying in Korean that give-up the ghost , ‘ Guilty without money , and not guilty with money . ’ ”
That statement actually has case in point , peculiarly in the Lee family . regard that Jay Y. Lee ’s father — the technological chairman of Samsung — has had several of his own battles with corruption . Lee Kun - hee was convict of revenue enhancement escape and embezzlement in aremarkably standardized caseto this one back in 2008 . But in 2009 , before he could suffice his sentence , Lee Kun - heewas pardonedby then - President Lee Myung - bak , apparently so that Lee Kun - hee could continue to assist lead a campaign for South Korea to come through a bid for the 2018 Winter Olympics . The campaign for the Olympics was successful , and Lee Kun - hee resumed his role without ever serving a day in slammer . ( That was n’t even the first time Lee Kun - hee was pardon on graft bursting charge , either — he wasalso pardonedback in 1997 . )
Historically , Korea has considered Samsung and other chaebol families“too big to fail . ” Sangin Park , an economics professor at Seoul National Universitytold Quartz , “ Koreans often dread that if the Korean chaebol owner family falls from power , then the larger conglomerate falls from power . And if the heavy conglomerate fails , they fear the economy will settle into crisis . ”
But times could be changing . Increasingly , the people of South Korea are becomingmore uncomfortablewith the idea of chaebol . And if Jay Y. Lee is convict once the test starts , it could put Samsung ’s carefully craft sequence plan into massive disarray .
In the past , even a strong belief would n’t necessarily be the end for Jay Y. Lee . After all , his father was convicted — and pardon — twice ! But the removal of Park Guen - hye from post make even that once truth more complicated . FromThe New York Times :
In the wake of the Park scandal , all political parties have consecrate to curtail presidential power to pardon chaebol tycoon convicted of white - neckband crimes . They also promised to block off chaebol chairperson from helping their tike amass fortune through dubious means , like forcing their companies to do sole business with the kid ’s businesses .
Depending on who bring home the bacon Park in office , as well as the general sentiment in South Korea , Lee — and Samsung — could face real repercussion . It ’s too ahead of time to make any stake about how this will all play out , but we ’ll be watching .
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