By YOUKYUNG LEE
AP Technology Writer
SEOUL, South Korea (AP) – South Korea was taken by warn Friday with a detain of a scion of a country’s richest family and de-facto personality during Samsung over his purported impasse in a large crime liaison that engulfed a boss and riveted a nation.
Prosecutors trust Lee Jae-yong, 48, a clamp authority during Samsung Electronics and a usually son of a bum Samsung chairman, gave bribes value $36 million to President Park Geun-hye and her tighten crony to assistance win supervision support for a well-spoken association care transition, including a quarrelsome partnership of dual Samsung companies.
A demeanour during how his detain affects a wiring giant:
LITTLE IMPACT ON PHONE, TV BUSINESSES
Some regressive commentators are disturbed that Lee’s detain could harm Samsung’s businesses and therefore a economy, that relies on such companies for exports and jobs.
But others boot such regard as exaggerated. “What would impact a businesses are a Galaxy phone’s success, a opening of a semiconductor zone and how quick Chinese rivals are throwing up, not either Lee Jae-yong is arrested or not,” pronounced Park Sang-in, a highbrow during Seoul National University.
Chiefs of companies such as Hyundai Motor Group and SK Group have been jailed before yet still ran their companies from behind bars.
Samsung Electronics, that is a world’s largest builder of mobile phones, TVs and mechanism memory chips, has 3 apart arch executive officers any overseeing a electronic component, mobile phone and radio divisions.
But long-term business decisions, such as appointing executives and determining on mergers and acquisitions, might be put on hold. Samsung routinely announces crew reshuffling and promotions any December, yet deferred those announcements in 2016 as it was dragged deeper into a domestic scandal.
Lee is not a initial in his family to face rapist charges. His father was convicted in 2008 and 2009 for piracy and taxation semblance associated to business exchange designed to pass down resources to his son. Lee Kun-hee, a bum chairman, stepped divided from his purpose during a association when prosecutors indicted him in 2008. The younger Lee will expected follow a identical march and stay divided from care purpose once investigators rigourously move charges opposite him.
FAMILY SUCCESSION HITS SNAG
As he stepped adult his purpose in a deficiency of his bum father, Lee was seen as a new face of Samsung, smooth in unfamiliar languages and prepared oversees. Since Lee insincere a bigger role, Samsung betrothed to inject a company’s top-down hierarchy with a nimble, startup-like attitude. Corruption allegations identical to those that took down his father might meant a repairs to Lee’s repute is irreversible.
Prosecutors were means to secure Lee’s detain in their second attempt, interjection to new justification display President Park’s broader impasse in Samsung’s family period plan. Initially, prosecutors focused on their justification that Samsung offering bribes and in return, a supervision corroborated a argumentative partnership of dual Samsung companies in 2015, that was a pivotal step in a care transition.
But after a initial ask was dismissed, additional justification from a cover that belonged to a tip presidential confidant showed that a supervision gave favors to Samsung in other areas associated to a Lee family’s father-to-son succession, pronounced Lee Kyu-chul, a orator for a special charge team.
Thanks to a family’s decadeslong period plan, a 48-year-old successor to Samsung was means to assemble outrageous resources even before starting his possess business.
Lee’s net value is estimated during $6 billion. Here’s how: In 1995, a elder Lee gave his usually son, afterwards in his 20s, 6 billion won ($52 million), that became a seed income to squeeze unlisted batch in several Samsung companies. And during a subsequent dual decades those unlisted Samsung companies saw increasing revenues formed on remunerative deals finished with other Samsung firms. The shares could afterwards be sole when a companies went public. Some Samsung bonds were sole during illegally inexpensive prices to Lee before he sole them off with outrageous returns, that after led to a self-assurance of his father.
OPPORTUNITY FOR REFORM?
With a Samsung scion’s arrest, others saw an event to change a business village prolonged criticized for bad corporate governance and a miss of transparency.
Even yet Lee has reduction than a 1 percent interest in Samsung Electronics and his father owns a 3.5 percent stake, a family’s change on a consumer wiring hulk and other Samsung companies surpass other shareholders interjection in partial to a approach they control a business sovereignty by a difficult web of cross-shareholding.
The partnership between Samsung CT and Cheil Industries in 2015 was one instance display how a Lee family could strive an outsized change on Samsung Group.
Opponents of a merger, mostly minority shareholders, pronounced a understanding foul advantages a first family while spiteful other shareholders by devaluing a cost of one company.
Samsung narrowly won a shareholder capitulation interjection to a support from a National Pension Fund, a pivotal investor. Lee became a infancy shareholder of a joined entity and he gained control over Samsung Electronics batch owned by Samsung CT before a merger. If Lee had bought some-more Samsung Electronics stock, it would have cost him billions of dollars. But by merging dual companies, he did not have to spend a penny.
“The detain of Lee Jae-yong should yield a movement for elemental changes to finish a collusion between a supervision and businesses, and remodel a chaebol,” pronounced Park, referring to a family-controlled business conglomerates that browbeat a economy.
Follow Lee on Twitter: www.twitter.com/YKLeeAP
Copyright 2017 The Associated Press. All rights reserved. This element might not be published, broadcast, rewritten or redistributed.