Samsung Boss On Trial Over 'manipulated' Takeover Deal

The jailed de facto leader of the giant Samsung group went on trial Thursday over an allegedly manipulated takeover in proceedings that effectively put 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.

Lee Jae-yong, the vice-chairman of Samsung Electronics and the grandson of the group's founder, is accused of stock manipulation, breach of trust and other offences when two other subsidiaries, Samsung C&T and Cheil Industries, merged in 2015.

A court spokesman confirmed to AFP that Lee was present in court.

Lee was the largest shareholder in Cheil Industries, and critics say 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.

He 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 South Korean president Park Geun-hye.

Lee's father, Samsung chairman Lee Kun-hee, died in October, leaving his heirs a vast fortune and an inheritance tax bill of around 13 trillion won ($11.7 billion), with the first instalment due by the end of this month.

Samsung is crucial to South Korea's economic health, and is active in sectors ranging from construction to healthcare to insurance.

But Vladimir Tikhonov, professor of Korean Studies 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 percent of South Korea's GDP.

"Samsung's main stakeholders are its shareowners, including the minor ones, its workers and South Korean society as a whole," he said.

"It is too big to be a dynastic property."

The trial was originally due to start last month but was delayed when Lee had emergency surgery for appendicitis.

He apologised last May for some governance issues at the group, pledging to ensure "there will be no more controversy over the succession" and that he would not allow his children to take over from him at the firm.

Copyright AFP. All rights reserved.

RECENT NEWS

Hedge Funds Continue Growth

Hedge funds are enjoying their strongest revival in more than a decade, drawing fresh capital as investors reassess thei... Read more

Crypto Euro Is A Must Now

European policymakers are facing renewed pressure to press ahead with plans for a digital euro, amid warnings that failu... Read more

Alpaca Drives Global Structural Growth

Alpaca’s rise from a developer-focused startup to a unicorn-valued infrastructure provider says as much about the chan... Read more

Are Funds About To Offload The Magnificent 7

Growing unease over valuations in parts of the US technology sector is prompting some of the world’s largest asset man... Read more

Ai Beginning To Deliver On Promise

For all the excitement surrounding artificial intelligence, its most immediate impact in the workplace has been measured... Read more

Stablecoin The Future Of Currency?

The payments system is undergoing a quiet but consequential shift. What was once the exclusive preserve of central banks... Read more