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South Korea's Moon leans toward pardon for jailed Samsung chief

Tradition of clemency for tycoons hard to end as chip competition intensifies

South Korean President Moon Jae-in is under pressure to pardon jailed Samsung Vice Chairman Lee Jae-yong.

SEOUL -- South Korean President Moon Jae-in, a dyed-in-the-wool progressive who once loathed pardons handed out by predecessors to convicted captains of industry, may have experienced a change of heart when it comes to Lee Jae-yong of Samsung Electronics.

"Many people also have sympathy" for the company's imprisoned vice chairman, Moon said during a luncheon with representatives and leaders of South Korea's four-biggest conglomerates -- Samsung, Hyundai Motor, SK and LG -- at the presidential Blue House on June 2.

The executives were asking Moon to consider clemency for Lee, who has been jailed since January at the Seoul Detention Center. "The economic situation is unfolding differently than in the past, and I know it requires bold action by corporations," Moon added.

The comments, in contrast to the president's previous hard line on pardons, could give Lee reason to hope he may not serve out his sentence of two and a half years for bribing President Park Geun-hye and her friend with corporate funds worth 8.6 billion won ($7.7 million) in 2015.

Analysts say Moon has been swayed by public opinion favoring Lee, as well as Samsung's plan to invest $17 billion in the U.S., announced during the president's visit to Washington last month, as South Korea's biggest company faces an intensifying competitive landscape in the key business of semiconductors.

A pardon for Lee is "highly likely," said Park Sung-min, a veteran political analyst and head of Min Consulting. "People's sentiments are positive on this," he said, citing the Lee family's announcement in April that it is donating the massive art collection -- including works by Pablo Picasso and Claude Monet -- accumulated by Lee Kun-hee, Lee Jae-yong's father and the late chairman of Samsung, to South Korean museums.

"Conglomerates announced big investments in the U.S. during the South Korea-U. S. summit, supporting President Moon," Park said, referring to the leader's desire to be seen backing President Joe Biden's agenda to create jobs in the U.S.

Protesters including Justice Party lawmaker Jang Hye-young, fourth from left, gather near the entrance to the grounds of the presidential Blue House in Seoul on June 8 calling on Moon to not pardon Lee. (Photo by Kim Jaewon)

In a poll of 1,000 people conducted by marketing and public opinion survey company Hankook Research last month, 64% said they supported a pardon, compared with 27% who were opposed and 9% who expressed no opinion.

Analysts say a pardon for Lee is most likely to come around the Aug. 15 Liberation Day national holiday, which commemorates the end of Japanese colonial rule over the Korean Peninsula. That would follow the tradition of presidential clemencies granted at that time of year.

The Blue House, however, on the same day that Moon made his comments, urged against jumping to conclusions.

"The president will make a decision after listening carefully to a wide range of opinions," a senior official said. "He did not mention clearly whether he is for or against the pardon."

Samsung declined to comment on a potential pardon for Lee, as did Lee In-jae, an attorney at law firm Bae, Kim & Lee, who defended him during his trial.

Speculation that a pardon is in the works comes as Samsung faces tough competition with Taiwan Semiconductor Manufacturing Co. and other rivals in the global chip industry. The South Korean tech giant hopes to be the top maker of logic chips by 2030, adding to its current position atop the memory chip market. It plans to spend 171 trillion won to accelerate research on cutting-edge semiconductor process technology, and construction of a new chip plant.

Many South Korean newspapers have also asked Moon release Lee from jail so that Samsung can make bigger investments and step up acquisitions. Some even hope Lee can help the country secure more coronavirus vaccines by tapping his network of international contacts.

But others are speaking out against clemency for the Samsung leader. Jang Hye-young, who sits in the National Assembly -- South Korea's parliament -- with the progressive Justice Party, said Tuesday that a pardon for Lee would be a denial of equality before the law. "Lee should stay in prison until he completes his jail term," the legislator said at a protest outside the entrance to the Blue House.

Park Yong-jin, a member of the National Assembly in Moon's own governing Democratic Party expressed similar dismay last week, saying a pardon would be an affront to the rule of law and show that the wealthy and powerful always get priority for leniency. The lawmaker also scoffs at the idea Samsung needs Lee to run the show, saying his absence has not hurt the company's market value or investments.

Park Sang-in, a professor at Seoul National University agrees. Park noted in a KBS television debate that for chaebol, as South Korea's family-run conglomerates are called, there is no connection between the absence of family members from the boardroom and corporate performance. Further, Park said, Lee is involved in a separate legal dispute over alleged stock manipulation and accounting fraud, raising questions over whether a pardon is justified.

Prosecutors indicted Lee last year after investigating him and Samsung executives for 21 months. He denies the allegations.

South Korea has a long history of leniency for tycoons. In 2009, President Lee Myung-bak pardoned Lee Kun-hee, who had been given a suspended three-year jail term for embezzlement and tax evasion. The president then tasked Lee, an International Olympic Committee member, with helping South Korea win its bid -- ultimately successful -- to host the Winter Olympics in 2018.

That was not even Lee's first pardon. He received one from President Kim Young-sam in 1997 for a previous bribery conviction. Lee had received a suspended two-year jail term in 1996 for a 10 billion-won bribe paid to former President Roh Tae-woo.

Chung Mong-koo, honorary chairman of Hyundai Motor, was sentenced to three years in prison in 2007 for embezzlement and breach of trust, although an appeals court judge suspended the jail term, famously saying that Chung was too important to the national economy to do time.

And in 2015, President Park Geun-hye pardoned SK Chairman Chey Tae-won, who was serving a four-year jail term for embezzlement, in a Liberation Day clemency aimed at spurring investments by the conglomerate.

The pardons highlight the generous treatment chaebol leaders receive. The thinking among senior politicians appears to be that it is better to let top business executives out of jail so they can contribute to the economy, rather than keep them in prison. Chey was one of the executives pressing Moon to pardon Lee at the lunch meeting.

Attitudes are changing, however. CEOs nowadays often spend some time behind bars, as courts have become stricter, even if sentences are still lighter than what ordinary people receive. For instance Cho Hyun-ah, an heiress in the Hanjin conglomerate that includes Korean Air Lines, did time in 2014 for ordering a steward off a plane at New York's John F. Kennedy Airport after it had already pushed back from the gate in anger about how she was served nuts.

Former presidents have also enjoyed such legal indulgence. Kim Young-sam pardoned Chun Doo-hwan and Roh in 1997. Chun, a military strongman, was serving a life sentence for treason, while Roh faced a 17-year jail term for the same crime.

The tendency to grant such pardons has led people to believe Lee Myung-bak and Park Geun-hye could eventually receive amnesties. But for the time being, Moon seems more willing to consider leniency for Lee Jae-yong, who enjoys public sympathy, as opposed to the former presidents, who have little.

The decision on whether to pardon Lee is being watched not only to gauge the Moon government's fairness and conception of justice but also for the light it shines on the country's legal evolution. A senior analyst at a foreign securities company said that while the charges Lee faced can be debated, he was ultimately found guilty in a court of law and thus should serve out his term.

"If he is pardoned, it will signal to chaebol family members that they are still untouchable," the analyst said, requesting anonymity.

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