Ex-Samsung chief given 3-year suspended jail term

SEOUL (Reuters) - Former Samsung Group chief Lee Kun-hee, one of South Korea’s most powerful businessmen, was handed a 3-year suspended jail sentence on Wednesday for tax evasion, but was cleared of other charges.

Lee Kun-hee, former Samsung Group chairman, arrives for his trial at a Seoul court July 16, 2008. REUTERS/Lee Jae-Won

The court also fined Lee 110 billion won ($109 million), more than double the amount of taxes he evaded, but cleared him of charges of breach of trust and illegal issuance of bonds aimed at transferring wealth to his children.

His jail sentence was suspended for five years.

Analysts and experts had expected Lee to escape prolonged jail time because judges have often been lenient to South Korean corporate leaders convicted of white collar crimes on the basis that putting them behind bars could hurt business.

The decision not to incarcerate Lee comes only a month after the head of world’s No. 6 automaker, Hyundai Motor, was also given a three-year suspended jail sentence after being found guilty of fraud.

“We ruled against an actual jail sentence as the degree of illegality was not significant enough,” Judge Min Byong-hoon said.

South Korean prosecutors had sought a seven-year jail term and a 350 billion won fine for Lee, who led the country’s biggest conglomerate for nearly 20 years.

Forbes magazine in March estimated Lee’s personal fortune at around $2 billion, and his son’s was assessed at around $1.7 billion.


“The special prosecutors actually made it easier for Samsung to get away,” said Song Won-geun, an economics professor at Jinju National University, referring to their decision not to charge Lee with the most damaging accusation of bribery, settling instead with tax evasion.

Attempts to reach the prosecutors, who were not present at the verdict, were unsuccessful.

“South Korea’s tradition to be lenient towards white-collar, economy-related crimes has distorted the economic order of the nation,” said Rhie Sang-min of the People’s Solidarity for Participatory Democracy, which has long been critical of the way the country’s major conglomerates are run.

“It only further encourages economic crimes down the road.”

A number of Samsung executives were present in the packed courtroom and showed visible signs of relief when the suspended verdict was read.

“I am sorry,” Lee told reporters as he left the courthouse. Asked whether he was relieved at the verdict, he said: “I have to continue to feel responsible.”

A spokesman for the Samsung Group declined to comment.

Lee, 66, stepped down in April from his top roles in the group and flagship Samsung Electronics, the world’s leading maker of memory chips and LCD screens, after being indicted, but he remains a key shareholder in Samsung companies and his family wields powerful influence over the group.

Samsung group’s firms account for 20 percent of total market capitalization on the main board of the South Korean stock exchange. The group has more than 250,000 employees and its annual revenues of $160 billion are around the size of Singapore’s gross domestic product.

A special prosecutor in January launched a probe into corruption allegations after a former top legal executive at the group said some of its top management hid money and kept a slush fund to bribe politicians, prosecutors and officials.

The prosecutor also indicted nine other top executives, but found no evidence to support the bribery allegations.

($1=1008.2 Won)

Additional reporting by Park Ju-min and Kim Jung-hyun; Editing by Marie-France Han and Jonathan Thatcher