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Lee Jae-yong, the billionaire at the head of the Samsung tech empire, will be released from prison on Friday, a move that will refocus attention on the difficult relationship between South Korea’s biggest companies and the government.
Lee was granted parole on Monday, eight months after being returned to prison for bribing former president Park Geun-hye to help secure control of Samsung Electronics, the conglomerate’s crown jewel.
Samsung’s two-and-a-half-year sentence was cut short after authorities said he was eligible for parole after serving 60% of his sentence. Lee had already spent a year in prison before being released by a court of appeal in 2018.
His release is part of South Korea’s tradition of marking the anniversary of the end of Japan’s brutal rule over the country with pity for prisoners and marks a reprieve for the world’s largest producer of smartphones, computer chips and d ‘electronic screens.
But the move puts South Korea’s relationship back in the spotlight. chaebol, the companies that dominate Asia’s fourth-largest economy, and the government of President Moon Jae-in, which has promised to curb family conglomerates.
“This is a step backwards in terms of reforming the chaebols and a betrayal of people’s hopes of no longer having privileges offered to the tycoons,” said Park Sang-in, professor of economics at the National University of Seoul.
Samsung employees and investors are hopeful that Lee will start a wave of acquisitions and investments. They would probably focus on extending the domination of computer chips as well as to strengthen its 5G business and artificial intelligence technologies.
Samsung’s latest major acquisition was its $ 8 billion takeover of U.S. auto-tech group Harman in 2016. Critics say the company has been crippled by the pursuit of new deals because its 53-year-old descendant has been distracted by legal issues related to his succession from Lee Kun. -hee, his late father.
But Lee should decide where the next US business processor chip factory will be located soon after his release, said Kim Young-woo, an analyst at SK Securities. He added that new investment plans for the company’s display business were also likely.
Lee’s imprisonment has been very controversial in Korea.
Polls have shown that many South Koreans have supported his release and business groups, including US companies, have pressured the president to grant a pardon, citing damage to the economy by the detention of the most important entrepreneur in the country.
But many others say Lee’s release undermined Moon’s promises bring family conglomerates in line and put an end to the tradition of forgiveness chaebol leaders.
Chae Ibae, a corporate governance expert and former lawmaker, criticized the government for granting Lee a “privilege” while circumventing procedural rules and regulations.
“They seem to think that the decision will benefit them politically since public opinion is in favor of his release. But if the rule of law is not respected with frequent exceptions, it will ruin public confidence in state institutions, ”said Chae.
Lee also faces more legal challenges.
He is due to appear in Seoul District Court on Thursday for proceedings relating to the allegations of a $ 3.9 billion accounting fraud in Samsung’s biopharmaceutical unit. Prosecutors believe the measures were orchestrated by senior executives at the company to help cement Lee’s estate.
Lee and the company have denied the allegations.
Lawyers defending the company said a merger between Samsung C&T and Cheil Industries at the heart of the dispute “complied with the rules and regulations”, while the accounting changes at Samsung Biologics “also complied with international accounting standards and regulations.” .
The prospects of the Lee family are further clouded by $ 11 billion in inheritance tax which must be paid over five years. Analysts expect Lee and her two sisters to divest stakes in non-core Samsung group companies and raise Samsung Electronics’ dividends to foot the bill.
Additional reporting by Kang Buseong in Seoul