Not that this would suprise anyone familiar with Korea and how they generally treat Chaebol bosses convicted of corruption charges, but former Chairman of Samsung Group, Lee Kun-hee, received a suspended three-year sentence.
Prosecutors had hoped to send Lee Kun-hee to prison for up to seven years. They say his role in arranging the sale of Samsung assets to his son for bargain prices cost taxpayers and shareholders massive amounts of money. The official charge Lee was found guilty of was avoiding a mere $50 million in taxes by stashing money into subordinate’s bank accounts. However, the judge said the prosecution failed to prove Lee committed a breach of trust by improperly transferring control of the corporation to his son.
As Lee left court he again reiterated to all Koreans that he was “sorry” for all the trouble he has caused.
{ 16 comments… read them below or add one }
Whaddaya want for nothin’?
A rrrrrrrrrubber biscuit?
To the orphanage, your excellency. There are babies to be changed. And photo ops to be arranged.
Anyway, ’bout time these elder leaders step aside so that we can be entertained by the shenanigans of their sons. It’s their turn to have a go w/ the get-out-of-jail-free card.
I wonder if Lee’s minions actually call him “Gaka” (가가).
While there is an unequal treatment for the jaebol elite, I think we have to consider some other factors that may not apply to a similar case in western countries.
Like it or not, the jaebol are still run by anachronistic, top-down, authoritarian managers. Sudden removal of these misbehaving executives can have much direr consequences on the livelihoods of their employees and the employees of firms supporting the jaebol than should a president be removed from a western corporation.
I suspect in the face of a looming, major recession, the Government is loath to send any of these key business leaders to jail – even when they fully deserve it.
The natural question to all of this is, if not now, is there a good time to imprison any top jaebol executive to establish a precedent that may lead to greater management transparency?
The likely answer is there is never, ever a really good time — and eventually that day of reckoning needs to happen. But the current overall macro economic news is down right scary. And so out of concern for the greater societal welfare, the judges gave Lee the extra slack.
The decision does not move Korea forward, but it does not set Korea back either — whether we like it or not.
Per the NYT:
That is a rich irony – the group he was alleged to have bribed was unable to find evidence of any bribery.
There is also the question of how Lee amassed US$4.5 billion worth of hidden assets. He’s been chairman of Samsung this whole time, and Samsung has been the source of his wealth. How does US$4.5 billion find its way into his slush fund, if not by embezzlement or usurpation of corporate opportunities?
in America, stockholders really own the company.
In South Korea, the founding family actually own the company. It’s like their little kingdom.
Mr. Lee is getting a dubious sentence for attempting to give the company to his progeny, with paying the minimal tax possible, but somehow got caught.
The government’s hands are tied. Punish them, reap up some tax revenue and do what? Give everyone better health care? Buy more weapons? More free stuff to North Korea? How about a Yisoon shin class aircraft carrier?
Samsung will probably make better use of their own funds.
Society tries to stop the rich from getting rich with inheritance taxes.
The dirty truth is, even the middle class cheats rampantly on all sorts of taxes, and pulls every trick in the book, legal and illegal to pass on their inheritances.
We don’t live that long. Why envy the rich passing on their wealth?
They’ll never punish Samsung or Hyundai too hard. They drive the economy the way Ford, GM, and Chrysler once did.
Shocked. Even more shocked by the bullshit excuses.
Not.
#7 – I agree that inheritance taxes should be lower in order to prevent the illegal embezzlement.
Yes, you’re also right that middle-class cheats rampantly but also when it DOES, it gets caught and goes to prison, unlike the jaebol manager.
I’m not surprised about the corruption which is ubiquitous; neither am I surprised that an ultra-wealthy person managed out of jail; what strikes me though is that I heard a Korean minister say that Mr. Lee is too important for the economy to be jailed.
Sure, this is right, but by constitution all people are meant to be equal and the court is NOT dependent on the parliament. So, although it IS dependent, ministers and prosecutors should try their best at least not to look this way to save face. At least not to say it so loud on TV would be nice.
I just read an article about the declining number of foreign investments in Korea
http://www.koreatimes.co.kr/www/news/biz/2008/07/123_27693.html
Jaebol managers don’t seem to care about stock-holders’ opinion, people are protesting and not working, the economy is slow and the inflation high.
On top of all this we have just another murder from North Korea to remind us that we’re in this part of the world.
How do Koreans intend to attract foreign investments in their country?
If this verdict for tax avoidance were handed down in a Western country (USA, for example), would there be a mandatory sentencing requirement? Anyone know the specifics? Does Korean law require a mandatory sentence in any cases?
#7,
No, the stockholders own the company…The families just don’t care.
trust builds trust and with each and every suspended sentence foreign trust in korea’s corporate governance deteriorates further. lest there be any misunderstanding, there is direct correlation between decreasing trust and increasing transactional costs.
i don’t buy the excuse of a poor economy as driver when we can go back to better economic times and find similar suspended sentences. that’s merely correlation-not causation. the cause lies in another area.
“i don’t buy the excuse of a poor economy as driver when we can go back to better economic times and find similar suspended sentences.”
Well, yeah. Slush fund would do better for the economy if they remained in the bank accounts of the corporations from which they were misappropriated.
#12 jinja; Coyner’s apparently just switched out the Jameson’s for the soju and geometrically multiplied the rate of deterioration of his capacity to exercise good judgment.
Yea, Yea, Korea, Korea. It’s only another example of buffoonery of games that goes down in Korea. Him NOT serving jail time isn’t do to his ‘contribution’ to Korea society. It all about how the ‘rule of law’ doesn’t apply to the very rich in Korea. That is a fact and it should be noted.
I haven’t read the article, but have they forced him to pay the avoided taxes? Reimburse the shareholders? If he paid up the millions in avoided taxes I could give the prosecutors some credit for atleast doing the bare minimum of their job. But if he doesn’t have to pay the fines with hopefully some penalty, that is really disgusting. As he is not bankrupt he should be able to pay the taxes, reimburse the sharholders for the devaluation, pay a penalty.
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