Lee’s Sentence Makes Samsung “A Ship Without A Captain:” CEO

September 5, 2017 - Written By Dominik Bosnjak

The five-year prison sentence given to Samsung Group Vice Chairman and de facto leader Jay Y. Lee turned the company into “a ship without a captain,” co-CEO of Samsung Electronics Yoon Boo-Keun told Süddeutsche Zeitung at the latest iteration of the IFA trade show which is currently taking place in Berlin, Germany. While Mr. Lee was sentenced in late August, he has been in detention at a Seoul-based jail since February, having originally been arrested on charges of bribing top government officials, embezzling corporate funds, concealing proceeds of a criminal act, hiding of assets overseas, and perjury. Mr. Yoon described the current situation as “dangerous,” adding that “nobody would get on a ship without a captain” and specifically stating that such an analogy currently applies to Samsung.

The scandal which led to the conviction of Mr. Lee revolves around a controversial merger of Cheil Industries and Samsung C&T which took place in 2015 and facilitated the succession proceedings within the company, moving more corporate power to the part of the chaebol controlled by the founding Lee family. The Korean National Pension Service (NPS) — the biggest pension fund in the country and Samsung C&T’s largest shareholder — was unlikely to approve the consolidation as it was set to lose money on the deal, yet was allegedly pressured to do so by the former administration of President Park Geun-hye after Samsung Group bribed several organizations connected to her close associate Choi Soon-sil, the court found. While Samsung never denied paying the equivalent of millions of dollars to those organizations that backed President Park’s policy initiatives, Mr. Lee still insists he had no knowledge of those transactions which were approved by the now-discontinued Future Strategy Office of the conglomerate.

Mr. Lee’s legal representatives already appealed his prison sentence with the competent judicial body in the Far Eastern country, with the outcome of that move being expected to come to light by early 2018. President Park was impeached following the scandal and is currently undergoing her own trial, as is Ms. Choi. Despite the largest business conglomerate in South Korea being essentially leaderless, Samsung has yet to show any indication that it’s looking to replace Mr. Lee and is seemingly still hoping that his appeal will be successful.