Canadian Manufacturing

Lee freed on parole, showing Samsung’s might in South Korea

There were also views that Lee's prison term compromised Samsung's speed in major investments when it needs to spend aggressively to stay competitive in semiconductors and other technologies.

August 13, 2021  by Associated Press

Samsung leader Lee Jae-yong walked out of prison on Aug. 13 a year early in a parole decision demonstrating the conglomerate’s outsized influence in South Korea as well as continuing leniency for bosses who commit corporate corruption.

Wearing a gray suit and a mask, Lee left the prison near Seoul to a barrage of camera flashes and bowed in apology over the anger ignited by his case, which was related to the explosive corruption scandal that toppled South Korea’s previous president in 2017. Hundreds of demonstrators standing behind police lines simultaneously shouted slogans denouncing or welcoming his release.

“(I) caused too much concern to our people. I am very sorry,” said Lee, who had spent the past months in prison relaying his business decisions through visiting employees. He said he was keeping close attention to the “concerns, criticism and huge expectations” about him and then walked into a black sedan without answering reporters’ questions.

Lee, 53, is the third-generation heir of a business empire that runs everything from technology, construction, and financial services companies to hospitals, an amusement park and baseball and soccer clubs. The crown jewel, Samsung Electronics, singlehandedly represents about 20% of South Korea’s entire stock market value and one-fourth of its total exports.

Advertisement

Lee’s parole marked an about-face for the government of President Moon Jae-in, who after being elected in 2017 pledged to curb the excesses of “chaebol,” or South Korea’s family-owned conglomerates, and end their cozy ties with the government. Park Soo-hyun, Moon’s spokesperson, said in a statement that Lee’s release benefited “national interest” and pleaded for people’s understanding.

Business leaders and key members of Moon’s government had endorsed Lee’s early release in recent months, citing Samsung’s vital role in South Korea’s export-driven economy and the increasing challenges it faces in the global semiconductor market.

There were also views that Lee’s prison term compromised Samsung’s speed in major investments when it needs to spend aggressively to stay competitive in semiconductors and other technologies.

While Samsung remains dominant in memory chips, which are used to store information, it’s apparently falling behind rival Taiwan Semiconductor Manufacturing Co. in the race for high-tech chips designed to perform a broader range of functions.

The demand for advanced chips is expected to grow rapidly in the coming years, driven by 5G wireless services, artificial intelligence and self-driving cars. Some analysts say Samsung will become more active in pursing merger and acquisition deals to gain such technologies as Lee will be able to sign off on investments more easily.