Samsung boss verdict softens chaebol reform push

Monday's ruling should end a years-long legal saga that has dogged Korea Inc's most powerful man

  
Samsung Group heir Jay Y. Lee arrives at a court in Seoul, South Korea, January 18, 2021.

Samsung Group heir Jay Y. Lee arrives at a court in Seoul, South Korea, January 18, 2021.

Reuters/Kim Hong-Ji

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

HONG KONG - Jay Y. Lee's verdict will disappoint South Korea’s corporate reformers. Samsung Electronics' de facto boss has been sentenced to 30 months in prison for bribery, less than what prosecutors had requested. The lenient outcome will fuel fears that for officials, protecting jobs takes priority over reining in the country’s powerful family-led conglomerates.

Monday's ruling should end a years-long legal saga that has dogged Korea Inc's most powerful man. Lee was first convicted of bribery and other charges in 2017, and handed a five year prison term. He was released after serving just one year, when his sentence was reduced and suspended on appeal. That prompted the Supreme Court to order a retrial, where prosecutors pushed for a nine-year jail term.

It's unlikely Lee, who denied wrongdoing, will appeal again. The year he already spent behind bars will probably count as time served toward the new sentence. If so, that means the 52 year old has just 18 more months left to serve. Shares of the $540 billion Samsung Electronics, the conglomerate's crown jewel, slumped roughly 3.5% on the news - a small dent in the stock’s 50%-plus rally over the past six months.

On balance, this looks favourable for Lee and fellow corporate bosses. President Moon Jae-in has pledged to crack down on cosy ties between chaebol industrial groups and politicians. His two predecessors are in prison for corruption; Lee's father, who died in October, was also convicted of bribery and other charges. A harsh sentence would have sent a powerful message against corporate malfeasance.

It might have also played poorly economically, however. The pandemic has hurt the trade and technology-dependent country, and the unemployment rate hit an 11-year high in December. Business lobby groups decried even this lenient sentence, citing economic uncertainties and Samsung's role in job creation. Promised corporate governance improvements may be on hold for now.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own.)

(Editing by Pete Sweeney and Katrina Hamlin) ((robyn.mak@thomsonreuters.com; Reuters Messaging: robyn.mak.thomsonreuters.com@reuters.net))

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