India’s best-selling smartphone brand is mired in a massive corruption scandal in its home country South Korea, with the company’s vice-chairman and heir apparent Jay Y.Lee facing arrest for allegedly bribing country’s embattled president Gun-Hye Park with $36 million, according to news reports.
The state prosecutor has reportedly called on the court to issue an arrest warrant against Lee, after it emerged he had made “donations” to charities of Soon-sil Choi, a close aide of the suspended South Korean president. The bribes were reportedly paid with an intention to win favour from the government in order to consolidate Lee family’s hold on Samsung.
According to the New York Times, the court will come out with its decision in the next few days.
Here are 10 things you may want to know about the Samsung corruption scandal and the Lee family,
1. With a net worth of $26.6 billion as of 2015, Samsung’s Lees were ranked the richest business family in Asia by Forbes Magazine. The rankings noted that Lees controlled wealth equivalent to 22 percent of South Korea’s GDP.
2. In 2015, Samsung pledged an investment of Rs 1,970 crore in its Noida facility in India. There is a chance that Samsung’s reputation in India could come under a cloud because of the scandal at home. An analyst quoted by the New York Times reckoned that the family’s troubles at home could “slow down” its strategic operations.
3. Lee was reportedly questioned for more than 22 hours by South Korean investigators over Thursday and Friday last week. His testimony is believed to be closely linked to the fate of suspended President Park Geun-hye, who has appealed her impeachment by the South Korean parliament in the country’s constitutional court.
4. This is not the first time that members of the powerful Lee family are being investigated for corruption in their home country. In 2009, Jay’s father Lee Kun-hee was sentenced to three years in prison for tax evasion, but was later pardoned. The senior Lee is reportedly recuperating in hospital after suffering a massive heart attack in 2014.
5. Both the father and the son are reported to be billionaires. Jay is reportedly worth $6 billion and his father’s net worth is believed to be $14.7 billion.
6. According to an account, the younger Lee was trained to take over the reigns of Samsung business from an early age. Father Lee reportedly let his son attend board meetings to give him a sense of the family business.
7. Samsung’s management structure has long attended criticism from financial analysts for being too “opaque”. Forbes reports that New York-based Elliot Management, a shareholder in Samsung, has been one of more vocal critics of the Lee family in recent times.
8. The current allegations against the younger Lee relate to buying Samsung’s construction arm Samsung C&T for $9.3 billion in 2015. Samsung C&T was reportedly bought by Cheil Industries, which is the holding company for the Lee family. According to analysts, the deal was meant to consolidate the family’s hold on Samsung ahead of power transfer to the younger Lee from his father.
9. Samsung’s is one of the power families that has interests in multiple businesses in South Korea. Called Chaebol, the businesses controlled by these families are said to be too big to be prone to failure. LG and Hyundai are other prominent power families in South Korea.
10. The shares of Samsung took a hit in the wake of corruption allegations against Jay, falling by 2.9 percent as reportedly on Monday.