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Fri, Jun 13, 2008 - Page 10 News List

Former Samsung chief goes on trial over tax evasion

BREACH OF TRUSTLee Kun-hee accepted blame for any ethical lapses as he went on trial for the disputed transfer of control over the group to his son

AFP , SEOUL

The former head of South Korea’s biggest business group Samsung went on trial yesterday for tax evasion and breach of trust, less than two months after stepping down in the wake of a corruption probe.

Former chairman Lee Kun-hee accepted blame for any ethical lapses during his two decades at the helm of the group, which employs 200,000 people and accounted for more than 20 percent of the nation’s exports last year.

“All the lapses rest with me and I take full responsibility,” he said in an opening statement to a Seoul district court, appealing for leniency for seven codefendants.

COMPETITION

“I have been rushing forward without looking around over the past 20 years in the belief that I had to win the struggle against foreign competitors,” said Lee, 66, who was not asked to enter a formal plea.

Special prosecutors charged him on April 17 after a three-month probe into corruption allegations against the multinational. He quit the group later that month.

Prosecutors cleared Lee of bribery, the main claim made by a former Samsung chief lawyer turned whistleblower who had prompted parliament to call for the inquiry.

Lee could technically face life in prison if convicted. But most other South Korean tycoons brought to court on criminal charges have escaped severe punishment, with judges citing a negative impact on the economy.

The key point at issue in the trial is whether Lee had instigated and planned the controversial transfer of control over the group from him to his son Lee Jae-yong.

Previous court rulings found that executives arranged for the son to acquire control of Everland, Samsung’s de facto holding company, at a below-market price in the mid-1990s through the issue of low-priced convertible bonds.

Lee senior was charged with breach of trust over the transfer, with prosecutors citing the “remarkably low price” set for the bonds.

CONSPIRACY?

Lee’s lawyers say there was no conspiracy when the junior Lee acquired Everland and the son was the only person wishing to acquire the bonds.

Lee Kun-hee is also charged with evading a capital gains tax bill of 112.8 billion won (US$110 million).

The special prosecutors found that 1,199 borrowed-name accounts were used to make profits from the sale of shares in Samsung Electronics and other affiliates, and that 112.8 billion won worth of taxes was evaded.

They also said Lee’s hidden assets amount to 4.5 trillion won but added that no evidence of a bribery slush fund, as claimed by the whistleblower, had emerged.

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