- The Samsung heir served 18 months in prison for bribery
- Businessmen were convicted of a scandal that brought down a president
- South Korea says leaders needed help to overcome economic crisis
- Samsung may increase investment with Lee pardoned, analysts
SEOUL, Aug 12 (Reuters) – South Korean President Yoon Suk-yeol on Friday pardoned Samsung Electronics ( 005930.KS ) Vice Chairman Jay Y. Lee, and the justice ministry said the business leader was needed to help overcome a “national economic crisis”. “.
The pardon is largely symbolic, with Lee already on parole after serving 18 months in prison for bribery in a scandal that sparked mass protests and brought down then-President Park Geun-hye in 2017.
However, analysts said the pardon should mean Lee will be able to carry out business activities with fewer legal restrictions and could announce some big investments from Samsung, the world’s biggest maker of smartphones and memory chips.
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“With urgent needs to overcome the national economic crisis, we have carefully selected economic leaders who lead the national growth engine through active investment in technology and job creation to be pardoned,” said Justice Minister Han Dong Hoon in an information session.
Technology and export-dependent South Korea, Asia’s fourth-largest economy, is struggling with rising inflation, weakened demand, weak sentiment and a slowdown in spending. Read more
Lee, an heir to Samsung’s founding family, welcomed the decision and promised to work hard for the national economy “with continuous investment and job creation”.
Also pardoned by pro-business Yoon was Lotte Group chairman Shin Dong-bin, who was sentenced to two and a half years in prison on bribery charges, also linked to Park.
In a statement, Lotte said Shin would also help “overcome the complex global crisis.”
POLITICAL CRIMES
Park herself was pardoned late last year by her successor, liberal President Moon Jae-in, who struggled to fulfill campaign vows to clean up business and politics.
A poll conducted last month jointly by four pollsters showed that 77% of respondents were in favor of pardoning the Samsung leader, despite earlier protests.
“(This support) is apparently due to the current economic situation, but people also seem to have partly thought that Lee was somewhat in a position where he could not avoid pressure from the former administration,” said Eom Kyeong- young, a political commentator based in Seoul.
While business groups such as the Korea Chamber of Commerce and Industry and the Korea Federation of Enterprises welcomed the pardon for Lee, civil rights groups criticized Yoon’s pardons for businessmen.
Samsung Electronics Vice Chairman Jay Y. Lee leaves a court in Seoul, South Korea, August 12, 2022. Yonhap via REUTERS
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“The Yoon Suk-yeol administration … ultimately only aims for a country only for the rich,” People’s Solidarity for Participatory Democracy said in a statement.
Another jailed former president, Lee Myung-bak, was expected to be pardoned after Yoon raised the possibility in June, but was ultimately not on the list. He was arrested in 2018 and sentenced to 17 years in prison for corruption, embezzlement and bribery.
BACK TO BUSINESS
Analysts have long expected decisions on major projects and investments once Lee is reinstated, and company sources say those decisions should be made by Lee alone.
“This removes the employment restriction that Lee was technically under,” said Park Ju-gun, head of research firm Leaders Index.
“And projects that were being carried out by Samsung, such as large mergers and acquisitions or investments, could be tied to the pardon.”
Even before receiving the presidential pardon, Lee had returned to the spotlight, appearing in May with President Yoon and US President Joe Biden when they visited Samsung’s Pyeongtaek chip production facility.
He also visited Europe in June to meet with ASML Holding NV ( ASML.AS ) CEO Peter Wennink to discuss the adoption of key high-end chip equipment. Read more
Last November, Samsung decided on Taylor, Texas, as the site of a new $17 billion chip plant. Read more
Top Samsung executives have hinted earlier this year about possible upcoming acquisition activity. Samsung Electronics has not pursued any high-profile deals since completing its $8 billion purchase of audio electronics maker Harman in 2017.
While macroeconomic factors such as a drop in demand can influence investment decisions, Samsung has a huge war chest.
Samsung Electronics’ cash balance rose slightly to 125 trillion won ($95.13 billion) at the end of June from 111 trillion a year earlier.
While experts say Lee could now be more freely involved in management, his legal troubles persist due to an ongoing trial where he faces the risk of a return to prison if found guilty of fraud charges and stock manipulation.
Shares in Samsung Electronics closed down 0.5% compared with a 0.2% rise in the benchmark KOSPI (.KS11). Shares of Lotte Corp (004990.KS) fell 0.6%.
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Reporting by Joyce Lee, Soo-hyang Choi, Heekyong Yang; Lincoln Feast Edition
Our standards: the Thomson Reuters Trust Principles.