An appeals court yesterday upheld the conviction of two Samsung executives for helping the chairman of South Korea's biggest group transfer control to his son through an illicit bond deal.
The Seoul High Court endorsed guilty verdicts against Huh Tae-hak and Park Ro-bin for selling a controlling stake in the group's holding company to the son of group chairman Lee Kun-hee at a discounted price.
A lower court in 2005 had sentenced Huh and Park, the former and current presidents of the holding firm Samsung Everland, to suspended jail terms of three and two years respectively for breach of duty.
PHOTO: AP
The appeal court confirmed Huh's sentence and increased Park's suspended jail term to three years.
The case focuses on a 1996 transaction at Samsung Everland, which helped Lee Kun-hhee pass control of the family-run group to his only son, Lee Jae-yong.
The younger Lee bought 1.25 million Samsung Everland shares at 7,700 won (US$8.20) per share -- far lower than the market price at the time -- via an issue of convertible bonds.
The appellate court said the accused had sold the bonds to the son at a "remarkably low price" and the stock should have cost 14,825 won per share or more.
It also said a board meeting in October 1996 that approved the bond sale was invalid because not enough directors attended.
"It is clear that the accused have breached their official duty," the court said in a statement, adding it would make no ruling on whether the elder Lee was personally involved in setting the bond price at an excessively low level.
The son's purchase sparked protests from activists including law professors, who filed a complaint with prosecutors against Samsung chairman Lee in 2000.
"The significance of [yesterday's] ruling is that the appeals court has confirmed Lee Jae-yong's succession had been carried out through illicit means," said Kim Young-hee, director of activist group Solidarity for Economic Reform.
She urged the Lees to return the "illicitly acquired gains" to the company and other shareholders.
"The Samsung Group must embark on reforming its corporate governance structure," she said.
A lawyer for the accused said they would appeal to the South Korean Supreme Court.
Even if the Supreme Court upholds the lower courts' findings, Kim said, the 26 percent stake in Everland currently held by Lee Jae-yong cannot be nullified because of the statute of limitations.
But analysts say the case will be an obstacle if Lee Jae-yong, 39, tries to assume formal leadership of the group, whose US$150 billion in annual sales amount to 17 percent of the country's total economic output.
Samsung Everland controls the group through a large web of ownership that includes a 19.3 percent controlling stake in Samsung Life Insurance.
Samsung Life has a 7.3 percent stake in Samsung Electronics, which in turn owns 47 percent of Samsung Card. Samsung Card has a 26 percent stake in Samsung Everland in what is known as a circular chain of ownership.
After the East Asian financial crisis struck in 1997, South Korea launched a drive to reform corporate governance at the conglomerates. Despite relatively small direct holdings, many founding families still maintain a grip over their empires through complicated chains of investment.
Hyundai Motor chairman Chung Mong-koo is currently appealing against convictions and a jail term.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS