By Kim Rahn
Staff Reporter
Samsung Group's Vice Chairman Lee Hak-soo said that the actual owner of more than 3.2 million Samsung Life shares under 11 group executives names is Group Chairman Lee Kun-hee, according to MBC TV. The shares are equivalent to 16.2 percent of outstanding Samsung Life shares.
It cited sources who said that the vice chairman stated that Chairman Lee inherited the shares from his father and group founder Lee Byung-chul. He said the use of former and incumbent executive names for the shares was just aimed to ``manage the inherited assets'' and has nothing to do with the creation of slush funds or the alleged illegal transfer of group control to his only son Jae-yong.
The testimony, if proven to be true, would enable the chairman's family to avoid such charges of embezzlement or breach of trust. If so, what Samsung Group will have to do is to make good the payment of overdue inheritance tax estimated at about 700 billion won ($700 million).
It is speculated that the vice chairman's testimony was aimed at protecting Lee's family from allegations of embezzlement. A special investigative team has speculated that part of the dividends from Samsung Life were used by Chairman Lee's wife Hong Ra-hee to buy pricey paintings.
Therefore, how to define the shares, which have been protected under executive names, is expected to determine the level of legal action taken against the Samsung Group.
The team's independent counsel has yet to link these accounts under false names and the group's alleged managerial control transfer from the chairman to his heir Jae-yong.
Samsung Life and Everland are the two key group units used for the father-to-son transfer of group control.
The special investigation team is also investigating the sales of Samsung Life shares to Chairman Lee and Everland, a theme park controlled by Jae-yong back in 1998. At that time, Lee Kun-hee bought a 16 percent Samsung Life stake from 31 executives for 9,000 won apiece and Everland also bought an 18.4 percent Samsung Life stake from executives at the same price.
The counsel is looking into whether there was any group-based collaboration and if the sale price was appropriate. Samsung Life shares are now trading on the over-the-counter market at about 660,000 won.
In 1996, Everland issued convertible bonds (CBs) at lower-than-market prices, and Jae-yong bought them and took control of the group through a web of cross-shareholdings.