11 July 2024

The once-disgraced heir to the sprawling Samsung empire was on Thursday named top executive of its most important business, two months after South Korea’s president pardoned him for embezzlement and corruption convictions.

The board of Samsung Electronics, one of the world’s biggest smartphone and chipmakers, confirmed Lee Jae-yong’s formal ascent — though he had already been de facto leader since his father’s heart attack in 2014.

Critics have said Lee taking the reins so soon after his year and a half in jail is yet another example in South Korea’s history of convicted business leaders getting off the hook on economic grounds.

The Samsung Electronics board promoted Lee to executive chairman to give the company “stronger accountability and business stability” due to the “current uncertain global business environment”, the company said in a statement Thursday.

Samsung is the most powerful of South Korea’s “chaebols”, family-controlled empires that dominate business, and it contributes an estimated fifth of the country’s GDP.

Lee was imprisoned after convictions for fraud and embezzlement following a sweeping investigation that also brought down President Park Geun-hye in 2017.

After serving 18 months, just over half of his original sentence, Lee was released on parole in August 2021.

He immediately returned to work at Samsung.

In May, Lee was excused from a hearing in a separate fraud trial so he could host US President Joe Biden at a Samsung chip plant in South Korea.

Lee — who has a net worth of $7.2 billion, according to Forbes — received a presidential pardon in August 2022 with the expectation that he would “contribute to overcoming the economic crisis” in South Korea, the government said.

But critics slammed Lee’s elevation to chairman, with local civic group Solidarity for Economic Reform calling it “flawed on many fronts”.

“It is a far cry from responsible management for him to be named Samsung Electronics’ chairman when his illegal acts brought considerable damage to the company even though he was pardoned by the president,” the group said in a statement.

– Legal woes not over –

Lee’s father Lee Kun-hee, who suffered a heart attack in 2014 and was bedridden until his death at age 78 in 2020, was credited with turning Samsung into a global tech giant.

He held the position of chairman until his death, and the post had been left vacant until the younger Lee’s promotion Thursday.

By taking his father’s old title, Lee sends a clear message that he will be “fully responsible” for Samsung’s management decisions, said Kim Dae-jong, professor of business at Sejong University in Seoul.

Samsung is trying to show its leadership is accountable, as part of a drive “to gain an upper hand in the global memory chip competition”, he told AFP.

The elder Lee was convicted twice, once in 1996 of bribing former president Roh Tae-woo, and then for embezzlement and tax evasion in a slush fund scandal in 2008.

But suspended sentences meant he never served time in jail, and he received two presidential pardons.

The elder Lee went on to spearhead his country’s successful efforts to secure the 2018 Winter Olympics.

On Thursday, Lee Jae-yong told Samsung Electronics employees he believed the company would not just survive the current global economic turmoil but emerge stronger.

“There has never been a time when we didn’t face a crisis. But depending on how we respond to it, we can turn it into an opportunity,” Lee said in a post on an internal bulletin board.

His legal woes are not over: he also faces a separate trial over accusations of accounting fraud in the 2015 merger of two Samsung firms.