Corruption retrial vs Samsung heir starts

SEOUL, South Korea (AFP) — The heir to the Samsung empire returns to court this week for a retrial over a sprawling corruption scandal that could see him return to prison and deprive the world’s largest smartphone and chip manufacturer of its top decision-maker.

Lee Jae-yong is vice chairman of Samsung Electronics — where profits have been falling for months — and was jailed for five years in 2017 for bribery, embezzlement and other offences in connection with the scandal that brought down South Korean president Park Geun-hye.

The 51-year-old was freed a year later after an appeals court dismissed most of his bribery convictions, but that decision was set aside by the Supreme Court in August, which ordered a retrial.

The new proceedings begin Friday and are likely to last for months.

At the same time, Samsung Electronics is battling challenges from the US-China trade war and tough export restrictions imposed by Tokyo on key supplies amid a dispute with Seoul over wartime history.

While the firm’s daily business is managed by a board of directors, a leadership vacuum would greatly hamper its ability to make major decisions, KB Securities said in a report.

The retrial added to uncertainty for the company, said a source with direct knowledge, adding: “There are things that only Lee Jae-yong can do.”

Samsung Electronics is the flagship subsidiary of the Samsung group, by far the biggest of the family-controlled conglomerates, or chaebols, that dominate business in the world’s 11th-largest economy.

Its overall turnover is equivalent to a fifth of the national gross domestic product and it is crucial to South Korea’s economic health.

“It’s a huge burden for Samsung Electronics and will have negative ripple effects on the Korean economy,” said Kim Dae-jong, a business professor at Sejong University.

The phone maker has flagged a profit drop of more than 50 percent in the third quarter — its fourth consecutive earnings fall — faced with a long-running slump in the global chip market.