Samsung is the top selling brand of products sold from South Korea. The company’s ventures stretch across dozens of different business units involved in numerous markets including electronics, home appliances, semiconductors, buildings, pharmaceuticals, insurance, credit cards, and many more. Taken together, the Samsung conglomerate represents the country’s largest exporter. In 2017, the same year that the company was recovering from a recall over faulty batteries in its Galaxy Note 7 phones, the company became embroiled in a larger scandal concerning its influence over the South Korean government.
Lee Jae-yong is the third-generation leader of Samsung since its founding by his grandfather in 1938. In 2017, Lee was arrested on charges of bribing then-president Park Geun-hye. Prosecutors alleged that Lee and other executives offered to pay bribes of ₩43.3 billion (approximately $38 million at the time) in the form of donations to organizations run by Choi Soon-sil. Choi was a close confidante of president Park and had a strong influence on her. Prosecutors alleged that $26 million worth of bribes was embezzled from Samsung corporate funds and, in exchange for bribes, Choi would pressure Park to help sway government support for a merger of two units of the Samsung group. This was an $8 billion merger between Samsung C&T Corporation, which owned a controlling stake in Samsung Electronics, and Cheil Industries, another business in the Samsung group. The merger was approved and helped Lee to maintain control over the larger Samsung conglomerate, despite his family holding only a small fraction of company shares.
Lee was found guilty of bribery, embezzlement, illegally transferring assets overseas, concealing criminal proceeds, and perjury. He was sentenced to five years in prison. Park was later impeached and sentenced to 24 years in prison on convictions for bribery, coercion, and abuse of power. Choi was found guilty of bribery, abuse of power, and interfering in government business. She was sentenced to 20 years in prison and ordered to pay a fine of ₩18 billion (approximately $17 million at the time).
Judge Lee Jin-dong, presiding over Lee Jae-yong’s case, stated, “At the heart of this case is the collusion between political power and economic power.” Kang Won-taek, political scientist at Seoul National University, said in response to the sentencing of Park, “I hope that this trial will provide a good opportunity to sever the lingering legacy of collusion between political power and big business.”
In February 2018, Lee was released after less than a year in prison. Many criticized his early release as a sign that family-run conglomerates remain too powerful, while others welcomed Lee’s release, noting that he only served as a scapegoat for anti-conglomerate sentiment. Kim Kyong-man, an executive at the Korea Federation of Small and Medium Business, said, “In a time of worsening business environments, incarcerating businessmen for a long time does tremendous damage not only to their companies but also to the national economy.” Jun Sung-in, an economist at Hongik University in Seoul, stated, “This is a critical setback for the country… This case once again shows why the South Korean judiciary does not have the people’s trust when it comes to cases involving chaebol [family conglomerate] chieftains.”