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| Samsung Group leader Lee Jae-yong appears at Seoul Central District Court, Monday to attend a hearing on the prosecution's arrest warrant issued against him. / Yonhap |
Business circle worries leadership vacuum will hurt competitiveness
By Baek Byung-yeul
Samsung leader Lee Jae-yong appeared in a Seoul court, Monday morning, to attend a hearing that could send him to prison, again, over a succession plan plotted by Samsung executives involving alleged embezzlement and bribery.
Dressed in a black suit with a tie and wearing a face mask, Lee entered the court at 10:02 a.m. He was faced with a barrage of questions from reporters about possible legal violations in the controversial merger between two Samsung affiliates that was designed to transfer power from his father Chairman Lee Kun-hee, but didn't respond.
While the court decision is expected to come out Monday night or early Tuesday morning, a recent survey showed that 59.05 percent of Koreans wanted him to receive a ruling in his favor, expecting him to play a vital role in the country's economy.
Global Bigdata Research, a local research firm, analyzed 34,291 comments posted on discussion websites, blogs, social networking services and YouTube that mentioned "Lee Jae-yong" for five days from June 3 to 7. Its research showed that 7,488 of comments gave Lee the benefit of the doubt while 5,192 were against him.
"Analyzing the comments about Lee's alleged involvement in illicit managerial succession maneuvers at Samsung Group and other offenses, people generally expressed a negative opinion on that, but many had a positive opinion on Lee's visit to the Chinese city of Xian amid the virus pandemic in a bid to accelerate innovations in the chip business," the research firm said.
As President Moon Jae-in and his Cheong Wa Dae economic team are seeking to minimize the effects of COVID-19 on various industries nationwide, some Koreans believe Lee can address a series of crises facing the country, ranging from the prolonged trade dispute with Japan to economic disruptions caused by the pandemic.
However, he now faces a legal battle with the prosecution that is seeking an arrest warrant for him over allegations that he and senior group executives concocted a controversial "unequal" merger of two group affiliates, Samsung C&T and Cheil Industries in 2015, to boost his share ownership in the group to ease a management transfer.
The merger of the two Samsung units was said to have been a key step in Lee's succession, helping him assume greater control of the country's largest conglomerate. At the time of the merger, Lee was the largest shareholder in Cheil Industries. Citing that, some critics say executives sought to "artificially and intentionally" lower the price of Samsung C&T to give him a bigger stake in the merged entity ― a core part of the Samsung's web-like holding structure ― and consolidating his grip on the group.
On June 4, the prosecution requested the court to issue an arrest warrant for Lee and two senior executives, two days after the company requested the Seoul Central Prosecutors' Office to convene a citizens committee to judge the investigation regarding the merger of the two Samsung units and determine the validity of the potential indictment against them.
The request to convene the committee was interpreted as a last-ditch effort to save Lee from prison as being comprised of outside experts it could decide whether prosecutors should continue with their investigation.
If the court approves the prosecution's arrest warrant request, Kim Ki-nam, vice chairman and head of Samsung Electronics' semiconductor division, will likely be acting head of the group in Lee's absence.
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| CPeople watch a television report showing Samsung Group leader Lee Jae-yong's appearance at a court in Seoul, Monday. / Yonhap |
However, business analysts are expressing concern about a possible leadership vacuum that could hurt Samsung's competitiveness. Lee has been taking a leading role in overcoming the economic crisis cause by the pandemic, and the 19-month-long investigation by the prosecution could negatively affect the group's management normalization.
"When Korea was plunged into a trade dispute with Japan after Tokyo imposed restrictions on the exports of high-tech materials needed to make chips and displays in July 2019, Lee was in the vanguard representing the business circle, visiting Japan to meet high-ranking officials there. Even during the COVID-19 crisis, Lee was the first foreign businessman to visit China to inspect operations there," an official from a conglomerate here said.
"There is a consensus that Lee doesn't need to be imprisoned as he is not likely to flee considering his social position as a leader of the largest conglomerate in Korea," the official added. "As uncertainties surrounding the country's economy are growing, the investigation into the Samsung Group and Lee can be conducted without physical detention."
