Economy

Samsung heir Lee Jae-yong to win presidential pardon

Samsung heir Lee Jae-yong is to receive a presidential pardon next week, paving the way for him to retake the helm of South Korea’s biggest company as it confronts slowing demand in the global chip sector.

The billionaire scion of Samsung’s ruling family will be formally granted the pardon on Monday by president Yoon Suk-yeol, who as a prosecutor had led Lee’s prosecution on bribery charges.

Lee was released from prison on parole last year by the administration of Yoon’s predecessor, Moon Jae-in, having served 19 months of a 30-month prison sentence for bribing former conservative president Park Geun-hye.

As a convicted criminal, he was barred from holding a formal position at Samsung Electronics or any other company for five years after his conviction.

“In a bid to overcome the economic crisis by revitalising the economy, Samsung Electronics vice-chairman Lee Jae-yong, whose suspended prison term ended recently, will be reinstated,” the South Korean government said on Friday.

“Thank you for giving me the opportunity to start anew. I am sorry for causing concern to many people,” said Lee. “I will try harder to be a responsible businessman.”

Samsung Electronics shares rose 0.5 per cent on Friday amid investor anticipation that a liberated Lee will be able to give new impetus to one of the world’s biggest smartphone and memory chip manufacturers.

Investors, analysts and employees have issued a series of warnings in recent months that the company is losing its technological edge because it has prioritised rapid development and cost savings over quality and innovation.

Analysts are also waiting to see if Lee will start to deploy Samsung Electronics’ $100bn cash pile. The company last made a significant acquisition in 2016 with its $8bn takeover of US auto tech group Harman, sitting out a deals boom that has reshaped the technology industry in recent years.

“Now that he has been freed from legal restrictions, he needs to present a blueprint for Samsung’s future, how he plans to revive growth at Samsung,” said Park Ju-gun, head of Leaders Index, a business research institute in Seoul.

“The company’s shares have been sluggish as investors are not convinced of its growth strategies. He needs to present investors with Samsung’s growth strategies, either through big mergers and acquisitions or other things.”

Critics argue that the pardon heralds a return to an era of cosy and often corrupt relationships between Korean politicians and the ruling families of leading conglomerates, or chaebol.

“There is no reason to pardon Lee,” said Woochan Kim, professor of finance at Korea University Business School in Seoul. “This gives the wrong message that the country is going back to the past when convicted businessmen were not held responsible for their wrongdoing.”

Lee still faces charges of stock manipulation linked to the 2015 merger of two Samsung units engineered to consolidate his control of the conglomerate.

Shin Dong-bin, chair of Korean retail giant Lotte Group, who received a suspended 30 month sentence in 2018 for bribery, will also receive a pardon.

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