Ex-Samsung Boss Gets Suspended Sentence

July 16, 2008
Lee Kun-Hee won't serve time in jail.

Former Samsung group chairman Lee Kun-Hee was given a suspended prison sentence on July 16 for tax evasion, but a South Korean court cleared him of a more serious charge of breach of trust. Lee, who quit the nation's biggest business group in April after being charged following a corruption probe, was also fined 110 billion won (US$109 million).

"His wrongdoing is not serious enough to merit an actual prison term," said Judge Min Byung-Hoon at Seoul Central District Court. "It is difficult to say that the defendant committed breach of trust," the judge said, in connection with the murky transfer of corporate control to his son and heir apparent Jae-Yong. However the tax evasion "damaged the people's trust in the justice of taxation," he said.

Lee was convicted of evading a capital gains tax bill of 45.6 billion won on the proceeds of covert stock trading using "borrowed name" accounts.

A special prosecutor had last week demanded a seven-year sentence for the 66-year-old tycoon, who spent almost 20 years at the helm of the multinational.

"This is outrageous. Of course, we will bring it to the appeals court," the special prosecutor, Cho Joon-Woong said.

But most Korean tycoons facing criminal charges have escaped severe punishment, with judges citing a negative impact on the economy.

Lee was stony-faced when appearing in court but smiled as the suspended sentence was passed. "I feel very sorry for causing so much trouble to people," he said. He had admitted lapses during Samsung's 20-year race to stay ahead of foreign competitors but denied the specific charges.

Seven current or former group executives were on trial with Lee. Former vice-chairman Lee Hak-Soo and two others received suspended jail terms while four were cleared.

The verdicts were the culmination of a scandal which began last autumn when former Samsung lawyer Kim Yong-Chul publicly raised major corruption allegations. Parliament ordered an independent investigation. Prosecutors charged Lee and other executives in April but found no evidence to support the whistleblower's main claim -- that Samsung routinely bribed officials, judges and prosecutors through a slush fund.

Samsung, which began in 1938 as a small trading company, now has 250,000 staff in 59 affiliates and accounted for more than 20% of the nation's exports last year. Its products and services pervade every aspect of Korean life, to the extent the country is sometimes sarcastically dubbed "the Republic of Samsung."

The group is also one of the world's leading manufacturers of semiconductors, mobile phones and LCD displays.

Copyright Agence France-Presse, 2008

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