Incapacitated Samsung chairman to be charged with tax evasion
The 76-year-old chairman of Samsung — South Korea’s largest conglomerate — will be charged with tax evasion, marking the latest twist in the fortunes of the global technology-to-shipbuilding group.
Lee Kun-hee, who is incapacitated in a hospital in Seoul, is suspected of evading $7.5m in taxes and using bank accounts in other people’s names that held more than $350m, police said on Thursday.
Police referred the case to prosecutors, who will indict the ailing tycoon for tax evasion. Mr Lee is also accused of embezzlement as police believe funds of Samsung C&T, the group’s construction unit, were misappropriated for interior renovations of Mr Lee’s residence in central Seoul.
But the Samsung patriarch will not face the embezzlement charge, as police cannot investigate him, who reportedly remains unconscious after suffering a heart attack in 2014.
The move comes just days after his son and likely heir, Lee Jae-yong, was released from prison with a suspended sentence for bribing the country’s previous president. His release was criticised by many in South Korea as an another example of the judiciary showing leniency towards the country’s most powerful businessmen.
Some critics said police unearthed the case and made it public to appease the angry public after the lenient verdict for the billionaire Samsung heir dashed hopes for reform at the country’s big family-run conglomerates known as chaebol.
“Public sentiment on the Lee verdict is very bad so authorities had to show their determination for corporate reform somehow,” said Park Ju-geun, head of research group CEO Score. “It is important for authorities to keep pressure on Samsung to improve its governance, ahead of local elections later this year.”
In 2009, the elder Mr Lee was convicted for tax evasion, but then pardoned by South Korea’s president. Following the decision, he played an instrumental role in lobbying for the Winter Olympics to take place in South Korea.
The case, coupled with Lee Jae-yong’s release from jail, is expected to intensify calls for chaebol reform in South Korea as the public remains unsatisfied with a lack of progress made since President Moon Jae-in took power last May, calling for better corporate governance.
Police said Mr Lee and one of his executives at Samsung dodged the taxes in 2007-10 by hiding his assets in 260 bank accounts under the names of 72 Samsung executives. They added that about Won3bn ($2.8m) of company funds were misappropriated in 2008-14 as Samsung C&T paid for refurbishment costs for the group’s controlling family.
Lee Jae-yong is expected to resume his activities officially by attending the opening ceremony of the Winter Olympic Games on Friday in Pyeongchang. Samsung Electronics said it could not comment on the latest charges against its chairman.
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