Korea Bribery Trial Focuses on Samsung Heir Talks With President

21-Apr-2017 Intellasia | Bloomberg | 6:00 AM Print This Post

South Korean prosecutors pursuing bribery charges against Samsung heir Jay Y. Lee zeroed in on a five-minute chat with the country’s president as the start of a relationship that put both behind bars.

The landmark trial of South Korea’s most powerful business figure focused Wednesday on what transpired during a tete-a-tete in September 2014. Prosecutors allege Lee accepted then-President Park Geun-hye’s request to support equestrian training for the daughter of a close friend, anticipating it would help secure government support for business deals. But Lee’s lawyers said he couldn’t possibly have sought favours from Park during a quick conversation on the sidelines of a public event.

Lee’s hearing – dubbed the “trial of the century” in Korea – threatens to expose a murky web of ties between top government officials and the richest family in the country. On Wednesday, the billionaire stared quietly in front of him as his lawyers fought allegations that meetings with Park helped Lee engineer a 2015 merger that cemented control over Samsung Electronics Co.

As evidence, prosecutors produced a letter the conglomerate sent to a local lobbying group before the pivotal merger of Samsung C&T Corp. and Cheil Industries Inc., opposed by Elliott Associates LP. In that memo, Samsung sought the lobbyists’ assistance, expressing fears of a hostile takeover by a foreign fund and citing “national interests.”

Jay Y. Lee in April.(Bloomberg)

Both Lee and Samsung have denied wrongdoing. They have argued that the company is a victim in the scandal and was pressured into making contributions.

Lee, the 48-year-old vice chair of Samsung Electronics, has been detained since February on charges he embezzled corporate money to bribe Park’s friend Choi Soon-sil through gifts of millions of dollars and a horse for her daughter. Park, ousted from office last month, has also been detained on bribery charges. Both have denied the allegations.

While Lee didn’t speak during Wednesday’s hearings, prosecutors presented his testimony from when he was questioned before the trial.

That included detailing his recollection of a 2015 incident when Park berated him during a private meeting.

“She suddenly changed tones and started scolding me,” Lee said, according to the testimony. “She said Samsung wasn’t doing enough sending athletes abroad for training and buying them good horses, which all helps to make better performance at the Olympics.”

Prosecutors said Lee convened a meeting with Samsung officials afterward and “ordered” them to do a better job. Lee’s lawyers disputed that, saying he had only “conveyed” the president’s comments.

The heir to the Samsung empire is among the most prominent figures implicated in a scandal that’s reached the highest levels of business and government. Lee’s ascension to the top of South Korea’s biggest conglomerate has stalled as he remains in detention during the trial.

The world’s biggest maker of smartphones this month posted its best quarterly operating profit in nearly four years on the back of its workmanlike semiconductor and display units. Its latest marquee device, the S8, began shipping this week. The Suwon, South Korea-based company said last week it had accepted more pre-orders for the gadget than its previous version, the S7.

Still, Lee’s detention may delay long-term strategic moves such as acquisitions and restructuring. The court proceedings are scheduled to end by late May under a law that fast-tracks cases initiated by a special prosecutor.

According to the testimony presented by prosecutors, Lee sees his role as focused on contacting and managing clients and partners abroad with each affiliate in the conglomerate working on their own businesses, that is then reported through the conglomerate’s corporate strategy office.

Lee’s lawyers said the prosecution has overplayed his role in the company and have made an error in equating his status with his father Lee Kun-hee, the man credited with transforming Samsung into a global behemoth.

The elder Lee has been hospitalised since a heart attack in 2014, which has resulted in his son taking a bigger role at the group. The trial resumes Thursday.

https://www.bloomberg.com/news/articles/2017-04-19/samsung-heir-s-trial-homes-in-on-five-minutes-with-ex-president

 


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