February 6, 2018 8:16 am JST

Samsung heir faces tough call on resuming leadership

Lee released from jail, but case probably headed for South Korea's Supreme Court

KENICHI YAMADA, Nikkei staff writer

Lee Jae-yong, vice chairman of Samsung Electronics, leaves the Seoul High Court in Seoul, South Korea, Monday, Feb. 5, 2018. © AP

SEOUL -- Despite being released from detention Monday after receiving a reduced sentence on corruption charges involving South Korea's former president, Lee Jae-yong is still facing an uncertain future as the de facto head of Samsung Group.

The vice chairman of Samsung Electronics  had previously been sentenced to five years on five charges, including embezzlement and bribing former South Korean President Park Geun-hye. But the Seoul High Court halved and suspended his sentence on Monday, allowing Lee to walk free after nearly a year in detention.

After his father and Samsung Group Chair Lee Kun-hee fell ill, the younger Lee offered favors to Park and her confidante Choi Soon-sil in hopes they would help him take control of South Korea's largest conglomerate, according to his indictment.

But the Seoul High Court ruled that Lee had not made any illicit requests to the Park administration. The judge stressed this case was not a typical example of corruption, rejecting a key part of the prosecution's argument.

The High Court instead argued that Lee was intimidated into providing financial assistance to Choi's daughter by Park. It acknowledged just 3.6 billion won ($3.3 million) of Lee's payments as bribes, compared with the lower court's designation of 8.9 billion won.

Four former Samsung executives indicted alongside Lee also received suspended sentences.

After leaving the detention center, Lee said he spent the past year reflecting and wanted to be more mindful of his actions. He then visited his father.

The case will likely make it to the Supreme Court, with both Lee and the prosecution expected to appeal Monday's ruling. Meanwhile, growing inequality has turned the South Korean public against the country's sprawling conglomerates. Lee could face a massive pushback if he returns to Samsung's helm too soon.

Overseas investors will likely also speak out should Lee start making business calls while on trial. It is still unclear whether he will lead the Samsung Group again, according to local reports.

On the other hand, one Samsung official said Lee's absence has led to stagnation in the company. "Large-scale acquisitions and international partnerships are not moving forward," the official said. With some within Samsung eagerly awaiting his return, Lee faces a difficult decision.

Many convicted leaders of South Korean conglomerates have returned to top management posts after being pardoned. Lee's own father stepped down as Samsung Group chair in 2009 after receiving a suspended sentence for financial malpractice, but was pardoned and reinstated before the end of that year.

It is possible the younger Lee will also be pardoned. But many believe that unlikely, since current President Moon Jae-in has made reforming South Korea's conglomerates a top priority.

Lee's case is also closely tied to Park and Choi's trials. The Seoul High Court said the two colluded to extract bribes from Lee. "Even though Lee's sentence was reduced, there is no change to expectations that Park will receive a tough sentence for bribery," a source familiar with the matter said.

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