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Apr-18-2008Samsung vows reform after chairman indicted on tax evasion(topic overview)
CONTENTS:
- SEOUL (AFP) — Special prosecutors said Thursday they have charged Samsung chairman Lee Kun-Hee with tax evasion and breach of trust, following a three-month probe into South Korea's biggest business group. (More...)
- Personal information of more than 10 million users of Auction, South Korea's biggest customer-to-customer marketplace website, was hacked, according to a company official. (More...)
- Samsung apologized "for causing concerns," Lee Soon-Dong, president of Samsung's strategic planning office, said, according to a company press release. (More...)
- The prosecutors said that the 66-year-old chairman would not be arrested for fear of "enormous disruptions" to the Samsung management. (More...)
- The investigation has opened a window into the Byzantine ways that the Lees have been able to assert so much control over the far-flung group. (More...)
- Samsung has announced to restructure the company to avoid future illegal actions. (More...)
- Samsung issued a statement after the indictments, apologizing "for causing concerns" and adding it was "preparing reform plans" that it would announce next week. (More...)
- The biggest South Korean conglomerate is said to have bribed officials on a regular basis, which however has not been proven yet. (More...)
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SEOUL (AFP) — Special prosecutors said Thursday they have charged Samsung chairman Lee Kun-Hee with tax evasion and breach of trust, following a three-month probe into South Korea's biggest business group. They said Lee, 66, would remain free pending trial as would nine other executives who were also charged. These include vice chairman Lee Hak-Soo and senior group executive Kim In-Joo. Lee was charged with breach of trust for his role in the illegal transfer of control over his group to his son Lee Jae-Yong, who is a senior executive of Samsung Electronics. The illegal transfer process, led by senior executives, "was reported to Chairman Lee Kun-Hee at that time," the special prosecutors said in a report on their findings. [1] SEOUL (AFP) — Special prosecutors Thursday charged Samsung chairman Lee Kun-Hee with tax evasion and breach of trust, after a three-month probe into corruption allegations against South Korea's biggest group. They cleared Lee of bribery, the main claim made by a former Samsung chief lawyer turned whistleblower who had prompted parliament to call for the inquiry. The prosecutors said in their report that Lee, 66, would remain free pending trial, as would nine other executives including vice chairman Lee Hak-Soo who were also indicted. This was partly "in consideration of a negative impact on our economy."[2] SEOUL -- Special prosecutors said today that they indicted Samsung Group Chairman Lee Kun-hee on charges of tax evasion and breach of trust, while clearing South Korea's biggest industrial conglomerate of bribery allegations. The prosecutors said in a statement that they would not arrest Lee as it would "cause enormous disruptions" in Samsung corporate management and have "negative repercussions on our economy."[3]
SEOUL, April 16 (UPI) -- A high profile investigation in South Korea involving an alleged slush fund set up to bribe officials is winding down, prosecutors said. Special prosecutor Cho Joon-woong, looking into allegations of tax evasion and breach of trust involving Samsung Group Chairman Lee Kun-hee, said he "will announce the findings of the probe Thursday."[4] Lee Kun-Hee, the chairman of the Korean electronics giant Samsung, has been charged with tax evasion and breach of trust but cleared of bribery. A three-month investigation into South Korea's biggest business group cleared them of allegations by Kim Yong-Chul, a former Samsung lawyer turned whistleblower, that it created a multi-million dollar slush fund to bribe prosecutors and judges. Speaking to reporters after the findings were released, Mr Lee, 66, said he would think "deeply" about a reshuffle of Samsung's management. Asked whether he would resign, he said he would "think about it."[5] Special prosecutors yesterday charged Samsung chairman Lee Kun-hee with tax evasion and breach of trust after a three-month investigation into corruption allegations against South Korea's biggest business group. They cleared Lee of bribery, the main claim made by a former Samsung chief lawyer turned whistleblower who had prompted parliament to call for the inquiry.[6]
Samsung Group Chairman Lee Kun-hee has been indicted on tax evasion and breach of trust charges, according to South Korean special prosecutors, who reached their decision after a three-month, high-profile investigation into allegations of corruption at Korean electronics giant. The special prosecutors said Thursday they have indicted Lee on charges of evading taxes on billions of dollars and criminal charges of breach of trust.[7] AMMAN, Jordan (MarketWatch) -- South Korean special prosecutors said Thursday they have indicted Samsung Group Chairman Lee Kun-hee on charges of tax evasion and breach of trust, according to media reports.[8]
SEOUL, April 17 (Reuters) - Samsung Group on Thursday apologised shortly after a South Korean special prosecutor indicted its Chairman Lee Kun-hee for tax evasion and breach of trust, and said it will announce reforms next week. "Taking this special prosecution investigation as a new starting point, Samsung is preparing reform plans, based on advice from various sectors of our society," said Lee Soon-dong, president of Samsung's strategic planning office. "We will hold a press conference next week and provide you with details of these plans," he said in an emailed statement.[9]
A three-month probe by South Korean special prosecutors reached its climax, Thursday, with some good news for the country's largest corporation, and some bad news for its chairman. Investigators say they found no real evidence Samsung used a massive secret slush fund to bribe government officials. Earlier this year, a senior Samsung lawyer accused the company of tucking away more than $190 million for that purpose, prompting lawmakers to order the investigation. Samsung group Chairman Lee Kun-hee and nine of his associates will face other charges of corrupt financial dealings.[10] The four-month investigation has cleared Kun-hee of the most serious charge, bribery, but the lesser charges remain. His family is the wealthiest in South Korea. Authorities have not jailed him neither the other executives caught in the scandal, fearing it may severely hurt the country's economy. Although he faces jail time of at least five years, it's very unlikely that he will spend much time in prison. "People believe Samsung is a company that never fails, which is why to them the person who built up that group with his management skills, Lee Kun-hee, is thought to be god-like." said Kim Sang-jo, executive director of Solidarity for Economic Reform, quoted by Reuters. Lee previously told reporters out the prosecutor's office that he would accept all responsibility for any wrongdoing and implied that he would step down as chairman if indicted. The South Korean economy is dependent on its few mega-corporations.[11] SEOUL, SOUTH KOREA -- Following questioning on bribery and corruption charges, Lee Kun-hee, chairman of the Samsung Group, has been indicted for tax evasion. The indictment stems from billions of dollars that the chaiman had allegedly hidden in stock accounts under the names of his aides, the Korean Special Counsel announced on Thursday. Lee also faces charges of breach of trust in his involvement of the arranging for Samsung subsidiaries to sell stock to his son, Jae Yong, at deeply discounted prices, in order to help him take over management of the company.[12] Seoul - Samsung Group chairman Lee Kun Hee was indicted Thursday on charges of tax evasion and breach of trust, but a special prosecutor dropped bribery charges against him in an investigation of South Korea's largest conglomerate.[13] SEOUL, South Korea (AP) — Special prosecutors indicted the chairman of Samsung Group on charges of tax evasion and breach of trust Thursday, ending a probe that shook South Korea's biggest conglomerate for months.[14]
SEOUL (Reuters) - Samsung Group Chairman Lee Kun-hee was indicted on charges of tax evasion and breach of trust on Thursday, but was cleared of a more serious bribery charge after a probe into South Korea's biggest business group.[15] The head of Samsung, South Korea's biggest company, is facing charges of tax evasion and breach of trust. Prosecutors said they found no evidence to support more serious allegations, that the group's chairman, Lee Kun-hee, used a slush fund of more than 125 million euros to bribe politicians, prosecutors and officials.[16] The chairman of Samsung, South Korea's most powerful conglomerate, has been charged with breach of trust and evading taxes after a four-month corruption investigation. Lee Kun-hee was cleared of allegations that he had bribed public officials from a $200m (£100m) slush fund. South Korean prosecutors yesterday defended their decision not to arrest him, saying it would cause "too much disruption" to the faltering Korean economy. They said that the 66-year-old tycoon would remain free until his trial because of possible "negative repercussions" to Samsung, which employs three-quarters of a million people and makes almost a fifth of South Korea's exports.[17] South Korean prosecutors on Thursday charged Samsung Chairman and CEO Kun-Hee Lee with breach of trust and tax evasion, but decided not to charge him based on accusations that Samsung maintained a $200 million slush fund to bribe prosecutors, judges and civil servants.[18] South Korean special prosecutors have announced that they have charged Samsung chairman Lee Kun-Hee with breach of trust and tax evasion. Lee will remain free pending trial, with authorities saying they won't be arresting him because it the disruptive impact that could have on the electronics giant.[19] SEOUL, April 17 (Xinhua) -- South Korean Samsung Group's President Lee Kun-hee was charged with tax evasion and breach of trust on Thursday after a 99-day investigation by special prosecutors.[20] SEOUL (Reuters) - A South Korean special prosecutor investigating corruption at the Samsung Group on Thursday indicted Lee Kun-hee, the head of the country's largest conglomerate for tax evasion and breach of trust.[21] SEOUL, South Korea (AP) — Prosecutors probing corruption allegations at Samsung Group say they have indicted Chairman Lee Kun-hee for tax evasion and breach of trust. The prosecutors also said in Thursday's announcement that they have cleared the conglomerate of bribery allegations.[22] Wrapping up more than three months of a special probe into Samsung Group, the independent counsel indicted Thursday Lee Kun-hee, the conglomerate's powerful chairman, on charges of tax evasion and breach of trust, while clearing him of key allegations of bribery and questionable deals involving the group's ownership structure. The outcome, seen by many critics as a kind of "slap-on-the-wrist" indictment because Lee remains free pending trial, is widely anticipated to repeat a typical pattern of corporate scandals in Korea Inc.: When a scandal engulfs a conglomerate, its chief appears for questioning with much attention and is indicted without detention.[23] SAN FRANCISCO - Samsung Group Chairman was indicted of tax evasion and breach of trust on Thursday, but was cleared of a bribery charge, after a three month probe into allegations of corruption at South Koreas largest industrial group. Get stories by e-mail on this topic.[24]
April 17 (Bloomberg) -- Samsung Group Chairman Lee Kun Hee will stand trial for tax evasion and breach of duty, prosecutors said, after a three-month probe into allegations of corruption at South Korea's largest industrial group.[25]
Cho Joon-woong, who led the investigation, told reporters that prosecutors found "no trace" of systemic bribery. The probe has also examined long-simmering allegations by civic groups that South Korea's biggest family-run conglomerate has used dubious financial transactions to ensure corporate control passes from Samsung Chairman Lee to his son. Cho said Samsung has "a lot of structural problems, such as illicit transfer of management control" and said he hopes the "probe would serve as an opportunity for Samsung to shed these problems and be reborn as an undisputed ultra first-class global company."[14] In a strongly-worded statement, prosecutors said Samsung had a lot of "structural problems", including "illicit transfer of management control". This related to allegations that Mr Lee and other executives sought to use illegal accounting techniques to covertly transfer control of the business to his son. "It is the hope of our investigation team that this probe would serve as an opportunity for Samsung to shed these problems and be reborn as an undisputed ultra first-class global company," it said. Although denying wrongdoing, Mr Lee said during his interrogation that he assumed responsibility for the problems at the firm and might even consider stepping down. The corruption case has been keenly followed in South Korea where Samsung remains one of the country's most powerful and respected organisations despite growing concerns about the alleged behaviour of its leaders.[26]
"The independent counsel probe was considered the last chance for Samsung to be reborn as a respected company, but the result fell short of expectations," Kim said. For months, Samsung was under intense public scrutiny after its former top legal executive Kim Yong-chul turned whistleblower, alleging misbehavior ranging from creating massive slush funds worth US$220 million to bribing officials and perpetuating an accounting fraud involving wealth transfer within the Lee family. While corruption scandals at Samsung are common, interest in this investigation was high because the allegations were made by the group's former top attorney, who made a series of bombshell revelations backed by the Catholic Priests' Association for Justice, an influential group that played a leading role in ending the country's military dictatorship in 1987. Agents for the special prosecution summoned Lee for questioning twice and quizzed his wife and his only son. "Superficially the powerful elite will likely be more careful, but fundamentally a slap-on-the-wrist punishments only reinforces their self image of being Masters of the Universe," said Tom Coyner, president of Soft Landing Consulting, a Seoul-based management consulting firm. "And not being fully accountable to the law on the same level as the common person," he said. Samsung, known for its sleek mobile phones and flat-panel televisions worldwide, wields enormous power in Korea, accounting for one-sixth of the country's gross domestic product. For foreign investors, the perception of poor corporate governance at Samsung, which has Samsung Electronics under its wing, has long been a concern.[27] The office declined to comment to Reuters on the reports. The investigation was launched in January after a former top legal executive at the group accused some of its top executives of keeping a slush fund of more than $200 million to bribe officials. The former legal executive said the company had used its subsidiaries to help create and manage the slush fund using corporate accounts. The probe has also looked at allegations that the group's head Lee Kun-hee, one of South Korea's richest men, improperly tried to pass wealth to his children. Lee, who was questioned twice this month, said last week he took moral and legal responsibility for the case and would look into reforming management practice at the group.[28]
SEOUL, South Korea (CNN) -- Samsung Group chairman Lee Kun-hee and three company officials were indicted Thursday after a four-month investigation into corruption allegations, according to a special prosecutor.[29] A special prosecutor indicted nine other senior Samsung executives, but said Lee and the others would not be arrested. "The criminal acts subject to indictment today constituted grave crimes because the amount of tax evaded and profits taken by violation of duties were astronomical figures," the prosecutor said in its findings. Lee, 66, could face from five years to life in prison but analysts say he would likely escape prolonged jail time because judges have often been lenient towards corporate leaders convicted of wrongdoing, saying jailing them could hurt South Korea's economy. While the prosecutor cleared Samsung of the bribery allegations, he said group officials conspired to hide 4.5 trillion won ($4.55 billion) in Lee's assets and worked secretly to transfer wealth to Lee's children.[15] South Korea's parliament ordered the special prosecutor to begin an investigation four months ago, after a former legal council for Samsung, Kim Yong-chul, reported the allegations. Nine other Samsung executives were reportedly indicted on similar charges for their roles in the alleged corruption schemes, but were not arrested because, according to special prosecutor Cho Joon-woong, they had "admitted their wrongdoing" and because their arrest would disrupt the management of Samsung and endanger the national economy.[12]
SEOUL, April 17 (UPI) -- Reaction was mixed in South Korea Thursday over a special prosecutor's decision not to pursue bribery charges against Samsung Group Chairman Lee Kun-hee.[30] Samsung Group Chairman Lee Kun-hee arrives for questioning at the special prosecutor's office in Seoul, South Korea in this April 4, 2008 file photo.[22]
Special prosecutors earlier Thursday indicted Chairman Lee Kun-hee on charges of evading 112.8 billion won (US$114 million; 71.82 million) in taxes and breach of trust, ending a three-month probe prompted by allegations by a former Samsung lawyer.[31] Lee, 66, used nearly 1,200 accounts under other people's names to carry out profitable stock transactions and avoid 113 billion won (114.3 million dollars) in taxes, prosecutor Cho Joon Woong charged. Samsung had also been accused of regularly bribing public officials, but Cho said his team of investigators were unable to prove those accusations in their three-month inquiry. Nine other top Samsung managers, including vice chairman Lee Hak Soo, were indicted for their alleged roles in illegal practices by the company. 'The charges levied today involve an astronomical amount of money and are very serious crimes that deserve heavy punishment in court,' Cho's team said in its report. Its breach of trust charge stemmed from its accusations that Lee Kun Hee played an important role in the illegal transfer of power at Samsung to his only son, Lee Jae Yong. The inquiry was launched after one of Samsung's former attorneys, Kim Yong Chul, accused the company of establishing bank accounts amounting to 200 billion won in the names of its managers and other employees and using the money it deposited in them to bribe public officials.[13] "Samsung is preparing reform plans, based on advice from various sectors of our society," Lee Soon-dong, president of Samsung's strategic planning office, said in a statement. He also said Samsung "would like to apologize for causing concerns." The breach of trust charge resulted from Lee having been briefed by aides about those financial transactions, including the sale of bonds convertible to shares to Lee's children at below market prices, allegedly inflicting damage to subsidiaries. Prosecutors brought tax evasion charges against Lee as they found 4.5 trillion won ($4.5 billion) of his personal assets in mostly stock accounts under borrowed names and determined he evaded taxes worth 112.8 billion won ($114 million).[14]
Campaign groups which backed the allegations expressed dismay, describing the results as "disappointing and pathetic." "The core truth of this is bribery," said Kim In-Guk, head of the Catholic Priests' Association for Justice, a religious group which had spearheaded a campaign against Samsung's alleged wrongdoing. The investigation, which began in January, found that Mr Lee had assembled personal assets worth 4.5 trillion won (£2.3 billion) in bank accounts under other names, and that he had avoided paying tax on income from the trading of Samsung Group stocks. Mr Lee had also breached a duty because he was aware of alleged illegal transactions, including the sale of bonds convertible to shares to his son, the report found. "Samsung Group has a lot of structural problems, such as illicit transfer of management control," the prosecutors said in a statement. "It is the hope of our investigation team that this probe would serve as an opportunity for Samsung to shed these problems and be reborn."[5]
The prosecutor, Cho Joon-woong, said that Samsung controlled hidden funds of around $4.5 billion. Allegations of bribery could not be confirmed, he said, and anyway the statute of limitations had expired. Mr Lee was charged with evading taxes of 113 billion won (around $114m) and with illegally fiddling with the books by selling corporate assets at a discount as a way to pass corporate control to his son. He and nine other company executives also facing charges were not detained.[32] Chief prosecutor Cho Joon-woong announced the charges on live nationwide television, Thursday. He says investigators found that more than a thousand borrowed-name accounts were used illegally to make profits from selling shares of Samsung Electronics and other affiliates. He also says Chairman Lee evaded about $112 million worth of taxes. Lee and his associates also face breach of trust charges for allegedly transferring control of the Samsung group illegally from the 66-year-old chairman to his son.[10] "The charges levied today involve an astronomical amount of money and are very serious crimes that deserve heavy punishment in court," special prosecutor Cho Joon-woong said at a nationally televised press conference. Kim Yong-chul, a former laywer of Samsung, claimed in January that Samsung created huge slush funds to routinely bribe public officials, and illegally transferred control of the group from Lee Kun-hee to his son Lee Jae-yong.[20] Mr Cho's team was investigating claims by ex-lawyer Kim Yong-chul that the group had created a US$197 million slush fund to bribe government officials and politicians. They also investigated whether control of the group had been illegally transferred from Lee Kun-hee to his son Lee Jae-yong, a Samsung executive. His father was charged with breach of trust over the transfer.[6] Cho's team was probing claims by ex-lawyer Kim Yong-Chul that the group had created a slush fund totalling 200 billion won (197 million dollars) to bribe government officials and politicians. It also investigated whether control of the group had been illegally transferred from Lee to his son Lee Jae-Yong, who is a senior executive of Samsung Electronics.[2]
Parliament voted to set up the independent probe following claims by the group's former chief lawyer that it had created a slush fund totalling 200 billion won (197 million dollars) to bribe government officials and politicians. The special prosecutors had also investigated whether control of the group was illegally transferred from Lee to his son. "We have confirmed that convertible bonds were issued at remarkably low prices and illegally allotted," their report said.[1] Speaking at a press conference in Seoul today, the special prosecutors said Lee was charged with evading 112.8 billion won ($114 million) of taxes. He was also charged with breach of duty for incurring losses at Samsung when helping his son gain control of units of the group.[7]
Lees family has long been admired among South Koreans for building the conglomerate into the countrys best-known global brand but also reviled because of recurring corruption scandals. Lee is accused of hiding 4.5 trillion won, or $4.54 billion, in stock accounts held by Samsung executives and evading at least 112.8 billion won in taxes on the profits from those accounts. He also faces criminal charges of breach of trust that stemmed from something he has denied for years: involvement in arranging for Samsung subsidiaries to sell stock to his son, Jae Yong, at a discount price so that the son could take over management control of the business empire.[33] Samsung's ( News - Alert ) chairman was indicted on charges of tax evasion and breach of trust and accused of hiding billions of dollars in secret stock accounts and illegally transferring company assets to his son. Lee Kun-hee, 66, was indicted Thursday, along with nine other Samsung executives, who face similar allegations for their roles in the alleged corruption schemes.[34] Speaking to Current.com.au, a company spokesperson said the group would be holding a press conference next week at an undetermined date, which would unveil "reform plans". The announcement is the first indication Samsung will revise its practices, after a barrage of criticism from overseas investors and others in recent years over a lack of transparency. Samsung Group chairman, Lee kun-Hee was indicted yesterday on charges of evading tax on billions of dollars he hid in stock accounts under names of aides. The breach of trust charge stems from his constant denial of involvement in arranging Samsung subsidiaries to sell stocks to his son, Jae Yong, at low prices to help him take over the empire.[35]
Lee Kun-hee, the Chairman of the Samsung Group, which is the world's second largest conglomerate after General Electric, has been indicted on charges of tax evasion and breach of trust on Thursday.[11] The chairman of South Korean firm Samsung, Lee Kun-hee, has been indicted on charges of tax evasion and breach of trust.[36] South Korean prosecutors have formally charged Samsung chairman Lee Kun-Hee with tax evasion and breach of trust, following a three-month investigation.[19] The chairman of South Korea's largest conglomerate Samsung, Lee Kun-hee, has been charged with tax evasion and breach of trust.[37]
Samsung has annual sales of nearly $160 billion, accounting for 18 percent of South Korea's economic output. Lee was indicted for breach of trust in connection with a plan to transfer control to his son, a prosecutor said. He was also indicted for tax evasion. That indictment alleges he stashed assets "using the names of his executives," South Korea's news agency Yonhap reported.[29] Samsung chairman Lee Kun-hee and nine other executives have been indicted with tax evasion and breach of trust, with Kun-hee accused of possessing hidden assets totaling 4.5 trillion won ($4.5 billion).[38] Samsung Chairman Lee Kun-hee was likely to have some sweet dreams Thursday night, after he was cleared of bribery charges and the prosecutor decided not to arrest him, even though he was indicted on accusations of tax evasion and breach of trust.[39] Prosecutors indicted Lee on lesser charges of tax evasion and breach of trust. They also indicted nine Samsung executives, including Vice Chairman Lee Hak-soo, Yonhap reported.[30]
Now fortress Samsung is under siege. On Apr. 17, an independent counsel appointed by Korea's Parliament indicted Lee and 9 of his senior executives on charges ranging from tax evasion to breach of fiduciary trust after nearly four months of a sweeping probe.[40]
The chairman of one of the world's biggest and best-known corporations is facing criminal charges for tax evasion and other alleged misdeeds. Samsung Chairman Lee Kun-hee, arguably the most powerful businessman in South Korea, is believed to be unlikely to go to jail because his company is too crucial to his country's economy.[10] An extensive and embarrassing investigation of the most iconic industrialist in South Korea has ended with an indictment on tax evasion charges for Lee Kun-hee, the chairman of Samsung.[41]
Samsung Group will announce next week company reform measures after a special investigation team indicted chairman Lee Kun-hee tax evasion and other violations of duty.[42]
Lee Kun-hee still faces jeopardy on the remaining counts. It is alleged he sheltered 4.5 trillion won ($4.55 billion) in assets, conspiring with Samsung Group officials to transfer wealth to his children. The Lees have maintained their grip on the Samsung empire through a complex network of cross-shareholdings that multiply the power of their minority stake, with serious implications for corporate governance and accountability. Similar arrangements prevail at numerous other Korean chaebols. The investigation was seen as a test case both for the South Korean justice system and for the issue of transparency of accounts and corporate dealing that has discouraged foreign investment in the country.[39] Although Samsung was founded by Lee Byung-chull, third son Lee Kun-hee was at the helm when the run-of-the-mill "chaebol," or family-controlled business group, sprang into the top ranks of global technology names. Under his reign, Samsung grew to a giant group with about 60 affiliates, accounting for about one fifth of the country's exports. Leading its ships-to-insurance business portfolio is Samsung Electronics, the world's biggest maker of memory chips and televisions. Lee has spawned a cottage industry where his exploits, pronouncements and even menu choices have been eaten up by a ravenous South Korean public, whose lives are saturated with Samsung products and services. "Lee Kun-hee is said to be the symbol of South Korea's capitalism, but he is very unlike Western billionaires such as Bill Gates in that he is totally removed from the public eye," said Kim Hyun-mee, a sociology professor in Yonsei University.[43] Lee is the head of the country's most powerful business group Samsung, a firm synonymous with South Korea's global success. His business acumen and secretive ways have made him the object of endless fascination and speculation at home. "People believe Samsung is a company that never fails, which is why to them the person who built up that group with his management skills, Lee Kun-hee, is thought to be god-like." said Kim Sang-jo, executive director of Solidarity for Economic Reform, which is calling for better corporate governance.[43]
Kim Gee-soo an analyst at Goodmorning Shinhan securities noted the foreign stake in the Samsung Electronics, South Korea's biggest company and the group's flagship firm, had fallen due to a lack of transparency and questions of corporate governance. "The indictment is meaningful in that this may motivate the Samsung Group to become more transparent before the eyes of the investors," he said. Critics noted few changes over the years at the family-run conglomerates known as "chaebol," despite a number of high-profile convictions of their leaders. Lee, who was questioned twice this month, said last week he took moral and legal responsibility for the case and would look into reforming management practices at the group.[15]
The indictment against the chairman, Lee Kun Hee, came hours after President Lee Myung Bak, on a trip to the United States, appealed for foreign investment in South Koreas struggling economy, promising that he would introduce "global standards" for the countrys businesses. Cho Joon Woong, the special counsel, whose team has investigated the company since January, said, "Samsung has a lot of structural problems, such as allegedly illicit transfer of management control and a lack of transparency." Chos investigation, which came with a parliamentary mandate, was another sign of painful change in South Korea, where top conglomerates have long been accused of bribing politicians, using dubious means to engineer father-son transfers of management control and falsifying their financial records to hide corruption.[33] If convicted, Lee could face up to life in prison. Few in South Korea predict that even if convicted, Lee would spend much time in prison, because of the practice among South Korean judges to punish corporate criminals lightly, especially when they are owners of big companies. Although he was convicted of bribery in 1995, Lee never spent a day in prison and continued to run his company. Cho, the special counsel, accused Lee and his aides of committing "grave crimes" but said he decided not to arrest them partly because they admitted to the wrongdoing and because their arrests would disrupt the management of Samsung, which accounts for one-fifth of the countrys total exports, and endanger the national economy.[33] Samsung, the world's biggest maker of flat screen TVs and computer memory chips, accounts for 20% of South Korea's exports. Lee, who denies the charges, could face from five years to life in prison, but in the past South Korean judges have often been lenient towards convicted corporate leaders on the basis that jailing them could hurt the country's economy.[16]
In what prosecutors said was an effort to spare the fragile South Korean economy from "enormous disruption", the 66-year old corporate leader will not be arrested. The three-month investigation, which was triggered by an internal whistle-blower, has shaken the Seoul corporate world to its core. The country's giant family-run chaebol conglomerates have had their share of scandal, but Samsung had appeared bullet-proof: the intensely private Mr Lee has seemed particularly Olympian. To Koreans, Samsung's 20 per cent contribution to the country's exports and triumphs over Japanese and U.S. competitors have sealed its status as the world's greatest company, so to see its leader under fire has been alarming.[41] The prosecutors dismissed the most explosive claim that Samsung used subsidiary companies to raise a slush fund to bribe influential South Koreans saying there was no evidence. In carrying out their probe, however, prosecutors discovered what they said were serious irregularities, long alleged by civic groups, that Samsung engaged in dubious financial deals to ensure corporate control passes from Lee to his son.[31] Samsung immediately denied the claims. The probe into South Koreas biggest family-run business group has also examined long-simmering allegations by civic groups that Samsung has used dubious financial transactions to ensure control of the conglomerate passes from Samsung Chairman Lee Kun-hee to his son.[44] As head of the Samsung Group, Lee Kun-Hee is one of South Korea's most powerful business leaders. His conglomerate has been rocked by allegations it hid profits and maintained a $200 million dollar slush fund to bribe officials.[45]
Lee, one of South Korea's richest men, has denied the allegations. Samsung Group, which accounted for about 20 percent of South Korea's exports in 2006, said it will reorganize its business and management.[25]
Corruption scandals at Samsung have been common. Some Korean experts say what they call an illegitimate ownership transfer at Samsung was the key source of the recurring legal woes. Until Samsung's Lee becomes less willing to hand over the group's control to his son, Jae-yong, such scandals won't come to an end, they say. Technically, Thursday's indictment could force Samsung's Lee to serve five years to life in prison, but many in South Korea don't believe that he will go to jail, given the judicial system's track record of leniency towards conglomerate leaders convicted of corruption.[23] South Korea's benchmark KOSPI index was up 0.6% on the day. Lee and his family had been accused by a whistle-blower, former Samsung legal affairs counsel Kim Yong-chul, of channeling money through slush funds in order to build up the stake of Lee's son, Lee Jae-yong, in the conglomerate as a way to entrench his eventual succession to the top post, keeping effective control within the family.[39] The investigation was a result of a number of accusations by internal whistleblower Kim Yong Chul, a former Samsung attorney. Earlier this month, Lee reportedly said that he would consider stepping down from his post, following the allegations. On further being questioned if he meant he would resign, he said he would think about it. The Lee family has long controlled Samsung Electronics with a minority stake, solidified by a cross-shareholding structure with its affiliates, much to the dismay of Samsung shareholders. This cross-shareholding structure is the hallmark of South Korea's largest family-controlled industrial conglomerates, the chaebol. The chaebol have been long accused of wielding their influence and for dubious transactions between subsidiaries to help the controlling families to evade taxes and transfer wealth to their heirs.[46]
The Lees allegedly had other methods of fending off the chaebol busters. The prosecutors accused the group of helping Lee's son and heir apparent, Lee Jae Yong, effectively gain control of large stakes in key Samsung units by arranging transactions that helped him acquire shares in a holding company at below-market prices. That vehicle is Samsung Everland, a theme park 20 miles south of Seoul with roller coasters, river rides, and attractions sporting names such as European Adventure, Safari World, and Aesop's Village. What's more, the group's own former chief counsel, Kim Yong Chul, has publicly claimed that the group stashed hundreds of millions of dollars in bogus accounts used to pay off prosecutors, politicians, and even journalists, but the prosecutors said they could not find supporting evidence.[40] Prosecutors said yesterday that the company had a lot of "structural problems", a reference to the alleged hiding of assets and transfer of millions of dollars to Mr Lee's children. Last week, Mr Lee said he accepted "moral responsibility" for the problems at Samsung and hinted that he may quit. Investigators probed allegations made by a former company lawyer that Mr Lee sold under-priced assets to his son Jae-yong in an attempt to secretly transfer power in the company, and created a slush fund in the name of Samsung executives to bribe prosecutors, judges and journalists.[17] Lee repeatedly denied all allegations. The investigation was launched in January after Kim Yong-Chul, a former top legal executive at Samsung Group, accused some of its top management of hiding money and creating a multi-million dollar slush fund to bribe prosecutors and judges. The three-month investigation cleared them of those allegations.[7] Regarding the bribery charges, the special prosecutor said that a slush fund of 4.5 trillion won or US$4.5 billion was created by Samsung but the fund was not used to bribe public officials. He said, 'All the Samsung Group executives accused of lobbying and all former and incumbent senior prosecutors accused of being lobbied are unanimously denying the allegations.[46] South Korean special prosecutors gave details of the charges after investigating claims by Samsung's former chief lawyer, Kim Yong Chul, that the group had diverted at least 200 billion won into a fund to bribe politicians and other government officials.[5]
The firm has, however, been cleared of the charges that the probe was set up to investigate. These earlier charges involved the existence of a theoretical slush fund totaling 200 billion won ($197 million) used to bribe government officials. A statement from the official prosecutors said: "It is the hope of our investigation team that this probe would serve as an opportunity for Samsung to shed these problems and be reborn as an undisputed ultra first-class global company."[38] Samsung is planning a press conference to discuss the allegations next week. Prosecutor Cho said that his investigators discovered $4.54 billion in hidden funds Lee kept in accounts held by his aides. In a decision that drew strong criticism, Cho accepted Lee's argument that the money was part of an inheritance from his father and Samsung founder, Lee Byung-chull. Lee, however, reportedly also did not pay taxes on the profits from those accounts, Cho said. The Samsung chairman had previously announced that he would step down as head of the company, pending the outcome of the investigation.[12] Special prosecutor Cho Joon Woong said that Lee Kun Hee owned $4.6 billions of dollars worth of stock in insurer Samsung Life and other companies, cash and bonds that were hidden in some 1,200 brokerage and bank accounts in the names of former and current executives. Lee's holdings, prosecutors suspect, were kept secret so that he could avoid paying hefty capital gains taxes on trades.[40] Special prosecutor Cho Joon-Woong said that Lee and nine other Samsung executives who were also charged would remain free pending trial. Unhappy with the special prosecutors''' decision, Kim In-Guk, the head of the Catholic Priests''' Association for Justice, a religious group that has led a campaign against Samsung'''s alleged misdeeds, said, '''The core truth of this case is bribery.[7] Special prosecutor Cho Joon-Woong said that Mr Lee and nine other executives who were charged with similar offences, which carry a 5 year minimum prison sentence, would remain free pending trial. Mr Cho said that the group would stay out of jail because they had admitted most of the charges against them, and the fallout from their arrests would be enormous.[5]
Nine other senior Samsung executives are also accused of wrongdoing. Prosecutor Cho Joon-Woong told a news conference that they conspired to hide 2.8 billion euros of Lee's assets: "The criminal acts that have led to these charges constituted grave crimes because the amount of tax evaded and profits taken through misuse of power were astronomical figures."[16] Nine other Samsung executives were also charged in connection with the allegations but Lee denied the charges. "The criminal acts subject to indictment today constituted grave crimes because the amount of tax evaded and profits taken by violation of duties were astronomical figures," said the prosecutor in its findings.[24]
Nine other executives, including Vice Chairman Lee Hak-soo, were also charged. Charges of breach of trust were leveled against Lee, 66, on the ground that he assisted his son, Jae-yong,a senior executive at Samsung Electronics Co., to get control of Samsung's de-facto holding company, Everland, through a transaction at a price below the market value.[46] The '''breach of trust''' in the new allegations refers to Kun-hee'''s role in the illegal transfer of control of Samsung group to Lee Jae-yong, a senior executive of Samsung Electronics and Kun-hee'''s son.[38]
Joining a long, storied tradition of corporate shenanigans, Samsung group chairman Lee Kun-hee was indicted today on billions of dollars worth of tax-evasion charges and breach of trust, the later stemming from long standing accusations of stock manipulation.[47] The outcome was decried by some as yet more special treatment for top tycoons, even though the charges potentially carry a stiff prison term if Chairman Lee Kun-hee is convicted. The three-month investigation determined that the assets were what Lee inherited from his late father and Samsung founder Lee Byung-chull, and rejected bribery allegations from former Samsung lawyer and whistleblower Kim Yong-chul.[14] Special prosecutor, Cho Joon Woong, who is leading the investigation into the alleged scandal, however, dropped bribery charges against the Chairman citing that his special investigation team was unable to gather requisite evidence to prove the charge. Lee has denied all the allegations brought against him.[46]
After the special prosecution's announcement, Samsung's public relations chief, Lee Soon-dong, told reporters that the group would announced a management-reshuffle plan next week. "Samsung would like to express its deepest apologies for causing great inconvenience to the public for such a long time," Lee said. He declined to elaborate on what kind of reshuffle the group would announce. Last week, after emerging from a second meeting with the special prosecutor, Samsung Group Chairman Lee hinted he may step down, but group officials played down his remark. An official at Samsung Group, who asked not to be identified, said the chairman won't be retired because of his charismatic status in the group.[27] Hyundai Motor Group Chairman Chung Mong Koo last year won a suspension of a three-year prison term for an embezzlement conviction after pledging to donate about $1 billion to charity. The suspension was overturned by the Supreme Court earlier this month, and a new trial is pending. Kim Woo Choong, the founder of now-defunct Daewoo Group, was sentenced to 10 years in prison in 2006 for his role in the country's biggest accounting fraud. His term was cut to 8 1/2 years following an appeal, and he was pardoned this year. The Samsung case "will lead to Chairman Lee loosening his grip on the group,'' said Yun Chang Hyun, a professor of business administration at the University of Seoul. "The management style at the country's conglomerates, where they are led by one charismatic owner, should gradually disappear.''[25] However, South Korea resists holding the groups fully to account, lest it jeopardise economic growth. In recent corruption cases miscreant bosses have been spared prison on the basis of their importance to the economy, provided they donate some of their ill-gotten gains to charity. Last year Chung Mong-koo, the chairman of Hyundai Motor, saw his three-year prison sentence for embezzlement suspended after he agreed to donate almost $1 billion (though the Supreme Court overturned the deal and ordered a new trial). Kim Woo-choong, the founder of Daewoo, was this year pardoned for an accounting-fraud conviction in 2006. Indeed in 1996 Mr Lee was convicted of bribing politicians, but his two-year prison sentence was suspended and in 1997 he was pardoned.[32]
Prosecutors also chose not to arrest Lee, saying it would cause "cause enormous disruptions" to Samsung's corporate management and have "negative repercussions on our economy amid the extremely competitive global economic situation." That's a familiar argument in South Korea, where tycoons like Lee are considered indispensable. Last year, Chung Mong-koo, the chairman of Hyundai Motor Co., though found guilty and sentenced to prison for embezzling corporate money, got a suspended jail term on appeal because his role was seen as too important to the nation's economy.[14] Son of the founder of Samsung, Mr Lee took over as head of the business in 1987 since when it has grown to become the world's largest producer of memory chips. Prosecutors said they would not formally arrest the 66-year old, one of South Korea's richest men, and that he would remain free pending his trial. They defended the decision not to detain him saying such a course of action would "cause enormous disruption" to Samsung's business and have "negative repercussions" for South Korea at a challenging time for the economy.[26] Samsung is the most influential conglomerate in one of Asia's largest economies. Samsung employs about 250,000 people in some 60 businesses; its sales make up nearly a fifth of the South Korea's gross domestic product. Prosecutors questioned Lee, his wife, his son and many of his key aides, while raiding many Samsung offices.[14]
Samsung accounts for more than 20 percent of South Korea's total exports. In all, chairman Lee stands accused of breach of trust for permitting an illegal transferring of control Everland, Samsung's holding company, to his son, Lee Jae-Yong, through a subsidized sale of bonds.[19]
After reading a harsh report by a Japanese adviser on the rigid and outdated management practices at South Korea's biggest conglomerate, Chairman Lee Kun Hee summoned 100 top executives to a June 7, 1993, meeting at the baroque Kempinski Gravenbruch Hotel, a former hunting lodge near Frankfurt. The reclusive billionaire angrily lectured his brass on the urgency of developing world-class, trend-setting products--and made them watch a 30-minute video documenting shoddy production of Samsung washing machines.[40] Samsung, South Korea's largest conglomerate, later said the comments did not mean Lee or anyone in the top management would step down. It has repeatedly denied allegations of wrongdoing.[28]
The 66-year-old Lee, South Koreas most influential business executive, has been called in twice by investigators for hours of questioning about the allegations. Family members, including his wife and son, along with top Samsung executives have also been questioned extensively.[44] The 66-year-old Lee, one of South Korea's richest people and its most influential business executive, was called in twice by investigators for questioning about the allegations. After the second round last Friday, Lee said that he assumed responsibility for the scandal and would consider a major revamp at Samsung, even hinting at possibly stepping down.[14]
SEOUL (Reuters) - South Korea's special prosecutor's office probing allegations of corruption at the giant Samsung Group will release its findings on Thursday, local media reported.[28] Scores of riot police were posted outside the special prosecutor's office. It is not the first time Mr Lee, who is the head of South Korea's richest family, has brushed with the law. In 1996, he was convicted of bribing two former South Korean Presidents, and received a two-year prison sentence, which was suspended for three years. He was later pardoned by President Kim Young Sam.[5] A South Korean special prosecutor on Thursday said it will indict Lee for tax evasion and breach of trust. Analysts speculated he would escape any serious criminal punishment because local judges see him as too valuable to the economy to spend time in jail.[43] "The charges levied today involve an astronomical amount of money, which includes illegal gains through breach of trust and tax evasion. They are very serious crimes that deserve heavy punishment in court," said chief prosecutor Cho Joon-Woong, reading the report on national television. He added: "We hope that the probe will help local companies meet global standards and be born again as the world's top class businesses." Analysts said they expect Lee to escape a jail term if convicted, with leniency shown to several other corporate chiefs in past cases.[2] Prosecutors have today indicted Mr Lee on charges of breach of trust and tax evasion. They say they will not arrest him, as it would cause enormous disruption in the company's operations.[45] The firm is responsible for about 18 percent of the country's economic output. Lee is indicted for breach of trust over a plan to transfer control of the company to his son. He also faces a tax evasion charge.[48]
Whistle-blower Kim Yong-chul triggered the investigation in January, claiming Korea's largest company set $205 million aside in hidden accounts. He also claimed Lee illegally transferred assets to his son, Jae-young. The funds, with senior executive names attached to them to cover up Lee's assets, were found and may lead to the tax evasion charges, Yonhap reported.[4] The investigation was launched January after a former executive accused some top management in the company of hiding money and keeping a slush fund of over $200 million to bribe politicians and officials. "The criminal acts subject to indictment today constituted grave crimes because the amount of tax evaded and profits taken by violation of duties were astronomical figures," the prosecution remarked in its findings. Lee could face from five years to life in prison, but it is likely he will escape prolonged jail time. Judges have often been lenient towards convicted corporate leaders, claiming that jailing them could hurt the economy.[49] Investors, relieved the four-month investigation had ended, said it may help bring transparency to the murky management structure at Samsung, bringing it closer to global standards. The investigation was launched in January after a former top legal executive at the group accused some of its top management of hiding money and keeping a slush fund of more than $200 million to bribe politicians, prosecutors and officials.[15]
The case stems from revelations by the group's former top lawyer, who alleges that the company keeps a slush fund of more than $200 million to bribe politicians, prosecutors and officials in South Korea.[11]
The complex management structure of South Korea's conglomerates known as chaebol often allows founding families to control a group through cross-shareholdings, despite holding a relatively small stake. After being questioned last week, Lee said he took responsibility for the case and would consider reforms. He received a suspended jail sentence in 1995 for contributing to a slush fund for former president Roh Tae-Woo but was pardoned in 1997.[2]
Lee Kun-hee's son acquired convertible bonds of the theme park Everland, Samsung's de-facto holding company, and took control of the group through buying the CBs "at a remarkably low price." Cho confirmed that Samsung created slush funds, but said no evidence was found of lobbying which allegedly involved such prominent figures as Prosecutor-General Lim Chai-jin and Kim Sung-ho, chief of the National Intelligence Service.[20] Lee was charged with evading $114 million of taxes, according to prosecutors at a press conference in Seoul. He is also charged with a breach of duty for incurring losses at Samsung while helping his son Jae Yong gain control of other units in the group.[49] Lee Hak Soo, 61, vice chairman of Samsung Electronics, was also charged with tax evasion and breach of duty, as was Kim In Joo, 49, a president of Samsung Group's Strategic Planning Office.[25] "The probe is generally viewed as a local political affair," Coyner said. "So long as Samsung Electronics, etc. operations are not significantly impacted, we should expect little concern about this episode by non-Koreans." Some Korean experts say what they call an illegitimate ownership transfer at Samsung was the key source of the scandal. Until Samsung's Lee becomes less willing to hand over the group's control to his son, Jae-yong, such scandals won't come to an end, they say.[27] Lee's wife and children, in fact, seem to have become even more entrenched within the group. The 66-year-old chairman and his family own just a sliver of shares of the chaebol's 59 affiliates, yet they assert astounding control. While they have only 3% of mighty Samsung Electronics, the Lees have final say over strategic decisions and major appointments. The family has retained this grip despite years of assault by reformers that brought down the powerful chiefs of the Daewoo, Hyundai, and Ssangyong groups.[40] Founded 70 years ago by Lees father, Samsung Group has interests in shipbuilding, insurance, leisure, apparel and dozens of other businesses. Samsung Electronics Co., its flagship, is a world leader in computer chips, flat-screen TVs and mobile phones.[31]
Lee evaded taxes on income from trading of Samsung Group unit stocks which was channeled through accounts held by other executives, the prosecutors said. They said he also breached his fiduciary duty because he knew of illegal sales of bonds by Samsung Everland Inc., the group's de facto holding company, and Samsung SDS Co., an information technology company that isn't listed.[25] The conglomerate - which is also involved in shipbuilding, construction, financial services and the chemical industry - denied the charged levelled against it. Lee Kun Hee and the other Samsung executives are not to be jailed before their trials because such arrests would cause 'enormous disruptions' in the running of Samsung, prosecutors said.[13] Lee and three other company executives were charged by prosecutors after a four-month inquiry into an alleged slush fund used to bribe government decision-makers, judges and other businesses. None of the men were arrested, due to the impact their absence would cause Samsung.[48] The probe cleared the firm of allegations by a former executive that it used a multi-million dollar slush fund to bribe prosecutors and judges. Both Samsung and Mr Lee have denied any wrongdoing.[26] The government sanctioned probe began in January, spurred by allegations made last year by a former top Samsung attorney that the conglomerate had a 200 billion won (US$202 million; 128 million) slush fund it used to bribe prosecutors and judges.[44]
Investigators, led by a special counsel appointed by parliament, were looking into allegations by Samsung's former chief lawyer, Kim Yong Chul, that the group diverted at least 200 billion won to bribe government officials and other influential figures. Prosecutors said they didn't find evidence of illegal lobbying of government officials.[25] Kim also asserted that Samsung ran a bribery network, offering cash gifts to prosecutors, officials and politicians. Kim said he personally delivered some of these bribes and named as bribe takers several former and incumbent senior prosecutors, who won powerful government posts under Lee Myung Bak, the new president. Those officials and Samsung have denied the bribery allegations.[33]
Kim, who noted Samsung has made similar promises in the past, has been active in pushing for better management practices at Samsung and other conglomerates. Those industrial groups, known as "chaebol," have long been accused of influence-peddling as well as dubious transactions between subsidiaries to help controlling families evade taxes and transfer wealth to heirs. Civic groups critical of Samsung complained that independent counsel Cho Joon-woong failed to indict Lee for the alleged bribery and levied the other charges without arresting him.[31] Mr. Cho said that in spite of '''extensive raids and searches through bank accounts, we failed to find any evidence of bribery.''' Samsung Group, which accounted for early a fifth of all South Korean exports in 2006, said it will reorganize its business and management.[7] With a global workforce of 754,000, it enjoys annual profits of more than $14bn ('7bn) and accounts for nearly a fifth of all South Korean exports. Samsung apologised for the damage that the affair had done to its reputation and promised it would "reform" its practices in the future. "Taking this investigation as a new starting point, Samsung is preparing reform plans based on advice from various sectors of our society," it said after the charges were announced.[26] "We can't accept" the results of the investigation, said Lee Sang-min, an official at People's Solidarity for Participatory Democracy, the largest South Korean civic group. "It's nothing but an attempt to condone (wrongdoing by) Samsung."[14] In November last year, South Korean lawmakers ordered an independent investigation into Samsung's alleged illegal activities including bribery, fraudulent accounting, tax evasion, embezzlement, violation of privacy laws, perjury, and obstruction of justice.[46]
About three years ago, a South Korean network produced a drama series called "Hero Generation" about Chairman Lee and his father, Samsung's founder.[10]
Lee, it would appear, is not new to facing corruption charges. After taking control of the Group in 1987 after the death of his father, Lee, along with other corporate leaders, was indicted in 1995 for bribing then South Korean President Roh Tae-woo.[46] The release says the company will announce corporate reforms at a press conference next week. The charges against Lee are not connected with his work as an IOC member in South Korea. His is the third case against IOC members in Korea in recent years but only Un Yong Kim faced charges related to his sport leadership duties. Kim resigned his IOC seat in 2005 after his conviction and serving time in prison. Yong Sung Park resigned from the IOC last year when he stepped down as International Judo Federation president. In 2006 he was sentenced to a suspended jail term over corporate corruption, which led to a suspension of his IOC membership, later restored.[48] The Seoul Central District Court will try to deliver a ruling on Samsung within three months, Ma Yong Joo, a court spokesman, said by telephone in Seoul. He said the first hearing hasn't been scheduled yet. The indictment of Lee, the head of South Korea's wealthiest family, isn't his first brush with the law. He was convicted in 1996 for bribing ex-Presidents Chun Doo Hwan and Roh Tae Woo. He received a two-year term in prison, suspended for three years, and was pardoned by President Kim Young Sam in 1997.[25] Although Mr Lee could receive a sentence of between five years to life for evading 112.8 billion won (£55 million) of taxes, the court has the flexibility to impose no time behind bars. Other convicted chaebol chieftains in South Korea have usually been handed suspended sentences.[41] "Lee Kun Hee, 66, was charged with evading 112.8 billion won ($114 million) of taxes," said special prosecutors in Korea.[24] Lee, 66, used nearly 1,200 accounts under other people's names to carry out profitable stock transactions and avoid 113 billion won (114.3 million dollars) in taxes, lead prosecutor Cho Joon Woong charged.[36]
Mr Lee was charged with evading 112.8 billion won (£58 million) in taxes, and breaching a fiducary duty because he knew about illegal sales of bonds by a company affiliated with Samsung.[5]
Chairman Lee has also been charged with evading capital gains taxes on the sale of more than $110 million in shares of Samsung and affiliated companies, and syphoning the proceeds through nearly 1,200 borrowed accounts.[19]
The $160 billion Samsung Group is by far Korea's biggest chaebol, or conglomerate. While most other chaebol split up or sharply narrowed their focus after Korea's 1997 financial crisis, Samsung today accounts for 18% of Korea's gross domestic product and 21% of exports. Few at the time, however, appreciated how serious Lee was about the second half of his famous dictum, the part about family loyalty.[40] The announcement follows a three-month investigation into alleged corruption at South Korea's biggest conglomerate. Samsung had also been accused of regularly bribing public officials, but Cho said his teams of investigators were unable to prove those accusations. Samsung is best-known for its electronics unit, but it is also one of the world's largest shipbuilders.[36] Critics accused Chos team of failing to delve deeper into the most damaging allegation against Lee Kun Hee and some senior aides of South Koreas president: bribery. They said Chos findings only hardened a widespread belief in South Korea that the authorities were too soft on the heads of South Korean conglomerates implicated in corruption cases.[33] Analysts said it was unlikely Mr Lee would receive a jail term, because South Korean judges had in the past taken a lenient attitude towards corporate bosses convicted of wrong doing. The trial has captivated the attention of the public in South Korea, with activist groups forming both for and against the prosecution of Mr Lee and the group.[5] The country's chaebol, which powered South Korea from the ashes of the 1950-53 Korean War to become Asia's fourth-largest economy, have been accused for years of having opaque management. Some of their leaders have been convicted of white-collar crime, but have avoided long jail sentences. Chung, who heads the world's sixth largest car manufacturing group, spent at brief spell behind bars, but then got a suspended sentence because the judge said his role in South Korea's economy was too important for him to be taken away from his job.[15]
Some said the charges that were filed which potentially carry prison terms sent a strong signal to Samsung and the rest of the countrys business elite. "This will have an effect," said Michael Breen, longtime British resident of Seoul and author of a book on South Korea. "I think anything of this scale that happens with Samsung becomes a lesson for everyone else."[31] Samsung Group accounted for about 20 percent of South Koreas exports in 2006. This article is copyrighted by International Business Times.[24] The case became more sensational as the former Samsung lawyer Kim, in cooperation with a group of Catholic priests, identified some of the alleged bribe-takers. The priests are known and respected for their battle against South Korea's former military-backed rulers in the 1970s and 1980s.[14] Later, the chief publicly apologizes for wrongdoing and continues to run the conglomerate. "It's deeply frustrating and the result gives a declaration of indulgence to Samsung," said Kim Sang-jo, head of Solidarity for Economic Reform, a civic organization that calls for better corporate governance for South Korea's conglomerates known as chaebol.[23]
Lee, who runs South Korea's biggest company, will go on trial without physical detention, as the prosecutor called the irregularities a "time-honored practice" by local conglomerates.[20] President Lee Myung Bak, who took office in February, pledged during election campaigning to increase corporate transparency and governance after scandals involving South Korea's biggest industrial groups.[25] Now the focus of attention will shift to South Korea's recently elected president, Lee Myung-bak. Although he campaigned on improving corporate transparency, the former chairman of Hyundai also pledged to push forward business-friendly reforms.[32] AP also reports that in the past South Korea has been reluctant to jail business leaders for fear of damaging the economy. Last year, Chung Mong-koo, the chairman of Hyundai Motor Co., though found guilty and sentenced to prison for embezzling corporate money, got a suspended jail term on appeal because his role was seen as too important to the nation's economy.[29] The hugely influential group accounted for more than 20 percent of South Korea's total exports last year.[2] The group accounted for more than 20 per cent of South Korea's exports last year.[6]
SEOUL, April 18 (Reuters) - The following is a summary of major South Korean newspapers on Friday prepared by Reuters in Seoul. Reuters has not checked the stories and does not guarantee their accuracy. Korea Customs Service unveiled Thursday its first group of drug-sniffing cloned dogs born late last year.[42]
"Samsung has led the advancing and globalizing of South Korean businesses. It's also true that it has structural problems," said Cho Joon-woong, the special prosecutor, in a nationally televised news conference.[11] "The special prosecutors found that 1,199 borrowed-name accounts were used to make profits from the sale of shares in Samsung Electronics and other affiliates. and 112.8 billion won worth of taxes was evaded," it said.[2] "The special prosecutors found that 1,199 borrowed-name accounts were used to make profits from the sale of shares," the report said. It said Lee Kun-hee's hidden assets amounted to US$4.5 billion, but that despite extensive raids and tracking of bank accounts, no evidence of bribery had emerged.[6]
Prosecutors said Lee Kun-hee's offences were not driven by greed. "This case is like using today's stern regulations to crack down on old wrongdoings that accompanied attempts to maintain and manage the governing structure of the company," the report said. It noted "many structural problems" at Samsung, like illicit transfer of managerial rights, lack of transparent bookkeeping and direct control over subsidiaries through an internal agency with "little legal basis".[6] In a strongly-worded statement, prosecutors said Samsung had a lot of'structural problems', including 'illicit transfer of management control'. 'It is the hope of our investigation team that this probe would serve as an opportunity for Samsung to shed these problems and be reborn as an undisputed ultra first-class global company,' it said.[37]
Samsung apologized for "causing concerns." "Taking this special prosecution investigation as a new starting point, Samsung is preparing reform plans based on advice from various sectors of our society," said Lee Soon Dong, an executive at Samsungs strategic planning office. After he was questioned by the special counsel last week, Lee Kun Hee promised to "revamp" Samsungs management lineup but stopped short of announcing his retirement. Another focal point of any shakeup would be the strategic planning office. Lee was accused of using the strategy department to increase his familys interest at the expense of Samsung.[33] '''Samsung would like to apologize for causing concerns,'' Lee Soon Dong, a president in the group's Strategic Planning Office, said in an e-mailed statement after the indictments. '''Taking this special prosecution investigation as a new starting point, Samsung is preparing reform plans.'''[7] "Samsung would like to apologize for causing concerns," said one of the company's execs, Lee Soon-dong, in a statement. "Taking this special prosecution investigation as a new starting point, Samsung is preparing reform plans, based on advice from various sectors of our society."[47]
Samsung later apologised "for causing concerns" and said it considered the investigation and indictments a "new starting point" for the firm. In the two decades since he took over, Mr Lee steered Samsung from a humble producer of cut-price electronics to one of the world's most successful hi-tech companies, rivalling the troubled Japanese giant Sony in European and U.S. markets. Forbes magazine lists his family as having assets of more than £1.5bn. His rise to power - recounted in a television documentary in 2005 - has been tainted by allegations of sticky-fingered accounting and nepotism. Mr Lee inherited Samsung from his father, Byung-chul, and his son and daughter are both vice-presidents in the conglomerate, which is one of the world's largest producers of ships, electronic parts and flat-screened TVs.[17] The conglomerate has denied wrongdoing. The probe has also examined allegations that Samsung has used dubious financial transactions to ensure corporate control passes from Lee to his son.[3]
"Samsung will have to make changes to enhance corporate governance, although how much of a substantial improvement it will make remains to be seen,'' Kim Sang Jo, a professor of international trade at Hansung University in Seoul, said. "Even if Lee Kun Hee steps down as chairman, there's no doubt he'll continue to have a big influence over the group.''[25] Besides the top boss, nine other Samsung executives were indicted, including the groups vice chairman, considered the right-hand man to the 66-year-old Lee.[31] Samsung Vice Chairman Lee Hak-soo, regarded as Lee's closest confidante, and two other executives were also indicted on breach of trust charges.[14] Nine other Samsung executives were indicted on similar charges, but none have been arrested. Prosecutors questioned Lee earlier this month.[18]
The prosecutors, referring to tax evasion charges, said Lee senior's hidden assets amount to 4.5 trillion won (4.5 billion dollars). They said they found no evidence that a slush fund had been created to bribe politicians and officials.[1] The charges of tax evasion and breach of trust are damaging, but crucially, prosecutors found no evidence that the company maintained a giant slush fund for bribing politicians, senior bureaucrats and judges.[41] "The charges levied today involve an astronomical amount of money, which includes illegal gains through breach of trust and tax evasion. "They are very serious crimes that deserve heavy punishment in court," the chief prosecutor, Cho Joon-woong, said on national television.[6]
The prosecutor Cho Joon-woong, however, dropped bribery charges against Lee on grounds of a lack of evidence to prove the accusation.[50]
The charges against Lee Kun-hee, the 66-year-old chairman of Samsung, seem small beer compared with the accusations.[32] To a sceptical public, it makes the new charges against Mr Lee seem less an example of rare prosecutorial vigour and more another case of flaccid judicial activity. It is unlikely that Mr Lee will serve time in prison. It helps that Samsung is such a power in the country--its many companies boast a workforce of 220,000 worldwide. Its sales are equivalent to some 20% of the country's GDP.[32]
Samsung was launched in 1938 when Lee Byung-chul (1910-1987), the son of a wealthy landowner who was in the rice milling business, opened a trading company. To increase revenue, Lee added a trucking business but Samsung, which means "three stars", did not take off until during and after the 1950-1953 Korean War when Lee added a textile company, started his country's first major sugar refinery and built a powerful trading network.[21] The investigation was triggered by the impeachment of a former Samsung lawyer. He said that Samsung had several secret accounts to bribe officials. The investigator said that they do not plan to arrest the 66 year old Lee Kun Hee. Disruption to Samsung'''s business could not be determined with such a step, the chief investigator said.[51]
Investors, feeling a sense of relief that the investigation had come to a resolution, pushed shares of Samsung Electronics (other-otc: SSNLF - news - people ), the flagship company of the Samsung Group, up 1.5%, to 661,000 won ($662.66), in Thursday trading in Seoul following the decision.[39] In the 1960s and 1970's Lee adds a dizzying array of companies to the group that included the Shinsegae department store, the JoongAng Ilbo daily newspaper, a shipbuilder, a chemical company and most importantly, in 1969, Samsung Electronics.[21]
Investors have generally taken a low-key approach to the scandal, pushing up shares in Samsung Electronics, for example, by some 25 percent since it broke in early November. "I think they expect things will be handled much better in the future," said Lee Jae-hyok, a technology industry analyst at Daiwa Securities SMBC in Seoul. Associated Press Writers Jae-soon Chang, Hyung-jin Kim and Jae-hyun Jeong contributed to this report.[31] "I am a little bit nervous, actually." Lee, widely seen as the driving force behind the rise of Samsung Electronics into a global force, hinted last week that he might resign over the scandal. Kim, the Yonsei professor, said such a move was unlikely to occur anytime soon, even with the indictments.[31]
Since last October, Kim Yong Chul, a former chief legal counsel at Samsung, has claimed that Lee and his closest aides kept vast amounts of money in slush funds, embezzled from Samsung subsidiaries and hidden in stock and bank accounts opened in the name of Kim and other Samsung executives.[33] Mr Lee was publicly accused last year by Kim Yong-chul, a former chief legal counsel at the company, of orchestrating a $200m slush fund to bribe public officials.[32] Kim also alledged the Samsung execs had created a slush fund of almost $200 million for the express purpose of bribing government officials and politicians.[19]
Special prosecutors dismissed as unsubstantiated, what some say is the central allegation is the case, that Samsung created a massive slush fund by siphoning money from subsidiaries to bribe prosecutors, officials and other influential figures.[34] About 20 pro-Samsung activists protested outside the special prosecutor's office, trampling on pictures of former lawyer Kim. "Samsung probe causes enormous damage to our economy," they shouted.[2]
The prosecutor said Lee and other senior Samsung executives will not be arrested.[24] Lee, age 66, was charged with nine other Samsung executives, including vice chairman Lee Hak-Soo.[19] Nine executives, including Samsung's number two official, Vice Chairman Lee Hak-soo, were also indicted without physical detention for collaborating in the practices.[20] Rich people like money. Rich people like to keep their money. Rich people like to hide their money from the people who come to take their money away. Samsung Chairman Lee Kun Hee was hiding about $4.54 billion and thus he has been indicted.[52]
Cho said Lee traded Samsung shares with secret money and secured huge profits, while evading about 112.8 billion won (114 million U.S. dollars) worth of taxes.[20] Prosecutors in 2005 also investigated whether Lee and other company executives used corporate funds to pay presidential candidates. Though cleared, Lee apologized and pledged to donate 590 billion won of his and his family's wealth to society.[25] The prosecutor also found a total of 4.5 trillion won (4.5 billion U.S. dollars) stashed in borrowed-name accounts were Lee's assets. Lee's reported fortune was 2 trillion won (2 billion U.S. dollars) this year.[20]
The news is the outcome of four months of investigation into executive corruption at the company, in which several members of upper management have been accused of concealing $4.55 billion in Lee's assets.[53] Many believed that the Samsung investigation would prompt the partial break-up of the company. After the latest round of questioning last week, Mr Lee hinted that it might eventually be restructured and he might step down.[41]
After a three-month investigation, Mr Lee was charged with tax evasion and breach of trust.[32] Even yesterday, as Mr Lee's alleged tax evasion came to light, the deference paid to Samsung was clear.[41] The tax evasion charge against Lee carries a possible sentence of between five years to life in prison, though judges have leeway to decree that no jail time be done.[14]
Nine other Samsung executives also face charges, but none was arrested. Mr Lee technically faces a life sentence, but many observers do not expect him to be put behind bars.[17] Nine other Samsung executives, including three from the department, were also indicted on corruption charges.[33] In April 2007, another Samsung executive pleaded guilty to U.S. charges of conspiring to artificially inflate the cost of Dynamic Random Access Memory (DRAM), affecting the price of personal computers worldwide.[18]
All have admitted to most of the key charges in the case; however, the indictment does not include charges of bribery, which was the most serious allegation from a former Samsung lawyer Kim Yong-Chul, whose accusations launched the investigation.[19] Some argue that corruption scandals at Korea's chaebol are caused by inconsistent bureaucrats, flip-flop government policies and a lack of transparency in the country's judicial system. "I think Samsung will ask its in-house lawyers to sign lifelong confidentiality agreements," said Michael Breen, a longtime Korea watcher and author of "The Koreans," when asked about how the special investigation will affect Samsung. "Samsung is so important in Korea and has such strong influence over the newspapers, many of which depend on its advertising, that the story will be quickly forgotten," Breen said.[27]
Chos sentiments were echoed by ordinary citizens in South Korea, where Samsung companies account for up to 20 percent of the countrys exports, by some estimates.[31] Samsung products and services account for about a fifth of South Korea's total exports.[10]
A South Korean woman walks past in front of Samsung's logo at downtown Seoul, South Korea, Thursday, April 17, 2008.[14] Samsung, South Korea's largest corporation, has been the center of numerous legal battles over the past few years.[18] The Samsung case has sparked a public debate about corporate corruption in South Korea.[10]
Cho told reporters in releasing the probes findings that taking Lee into custody was too big a risk for South Korea, citing "the extremely competitive global economic situation."[31] The indictments come after a three month probe into South Korea's biggest business group.[49] The announcement concludes a three-month probe into a slew of alleged wrongdoings at South Korea's biggest industrial conglomerate.[22]
The announcement follows a three-month investigation into alleged corruption at South Korea's biggest conglomerate.[26]
The complex management structure of South Korea's conglomerates known as chaebol often allows founding families to control a group through cross-shareholdings, despite holding a relatively small stake.[6] The scandal, however, has struck a nerve in broader society, where pride in the conglomerate's success as South Korea's top business group meets concerns that it has too much power and influence.[14]
The mild charges and meek actions by the prosecutors clearly show South Korea's ambivalence towards wrongdoing at the country's chaebol.[32] A special prosecutor was appointed by South Korea's National Assembly to look into the claims.[32]
The special prosecutor will report the conclusion of the investigations to President Lee Myung-bak in 10 days.[20] The indictment caps a three-month, high-profile investigation. Earlier in the week, Lee told reporters staking out the prosecutor's office that he would accept all responsibility for any wrongdoing and implied that he would step down as chairman if indicted.[8] As part of a wide-ranging investigation, prosecutors had questioned the younger Lee as well as the senior Lee's wife, Hong Ra-hee.[39]
The prosecutors said in their report that Lee, 66, would remain free pending trial, as would nine other executives including vice-chairman Lee Hak-soo, who were also indicted. This was partly "in consideration of a negative impact on our economy", they said.[6] Prosecutors say Lee and his associates are free, pending trial, in part to avoid a negative impact on the country's economy.[10]
The prosecutor said that Lee played a role in the illegal transfer of group control.[20]
Shareholder groups and other activists have alleged for years that Mr Lee has manipulated stock to ensure a smooth inheritance of the family power base within Samsung and its 50-odd subsidiary divisions.[41] Not 100 percent." Many interpreted the remark as Lee saying he would resign, but Samsung Group denied that was his intention.[4] Normally an angry public calling for accountability would welcome corruption charges against a corporate chieftain--but not in the case of the long-running scandal at Samsung Group.[32] The Samsung Group is said to account for one-fifth of the country's total exports.[12]
Samsung accounts for up to 20% of South Korean exports. Its products range from electronics, shipbuilding, car making and clothing.[49] Samsung accounts for up to 20 per cent of South Korean exports, with interests in electronics, shipbuilding, car making, and clothing.[45]
The electronics giant and ship builder accounts for nearly a fifth of all South Korean exports employing 754,000 staff worldwide and enjoying annual profits of more than $14bn (£7bn).[37]
The show is just one example of the ways in which South Korean media tend to elevate Chairman Lee and his company to demigod-like status.[10] Samsung apologised for "causing concerns" to South Koreans and said that next week it would unveil a reform plan to put the company right.[32] In May 2007, a South Korean appellate court upheld the conviction of two Samsung executives connected with illegal stock trading.[18] Samsung is a globally recognized brand. It is the biggest of a handful of South Korean "chaebols" - family-held mega-businesses that played a major role in this country's 50-year explosion to the world's 12th-largest economy.[10] Executives at other South Korean chaebol, the industrial groups that drove the country's economic recovery after the 1950s Korean War, have also been found guilty of corruption.[25]
Personal information of more than 10 million users of Auction, South Korea's biggest customer-to-customer marketplace website, was hacked, according to a company official. This is the country's largest case of private information hacking. [42] One of South Korea's most prominent businessmen has been charged with fraud and tax evasion.[45] Although scandal-plagued, Samsung, which produces a quarter of South Korea's exports, is also an object of national pride.[13] Lee, one of South Korea's richest people, was called in twice by investigators for questioning. Last week, he said he's assuming responsibility for the scandal, would consider a major revamp and even hinted about stepping down.[34] Industry watchers have noted the charges highlight a conflict of cultures between South Korea's traditionally family-run business conglomerates--which have historically lacked transparency and engaged in behind-the-scenes managerial moves--and more modern, publicly-held corporations with regulated operations and investor-driven leadership.[19] POLICE in riot gear took up station in front of South Korea's prosecutors' offices on the evening of Thursday April 17th to quell demonstrations.[32] Thats a familiar refrain from South Koreas biggest conglomerate, which for decades has helped drive the countrys economic growth while drawing flak for claims of shady practices.[31]
Samsung is the country's largest conglomerate and its Samsung Electronics is the world's largest electronics company.[11] Samsung, a massive conglomerate that includes Samsung Electronics Co., is characterized by a complex ownership structure based on a web of cross-shareholdings by group companies, some unlisted.[44] The National Assembly in November approved the independent investigation into the group, which includes the world's largest maker of liquid crystal displays and second-largest chipmaker, Samsung Electronics Co.[13]
"This probe was nothing but a window dressing," the Peoples Solidarity for Participatory Democracy and two other influential civic groups said in a combined statement. "Its a failed investigation that didnt even reveal a tip of the iceberg of corruption in Samsung," the statement said.[33] Shares in flagship Samsung companies retained strength after the indictments and analysts say the results of the probe may prompt the group to be more open.[15]
Shares in units of Samsung Group, which has assets of 261 trillion won, pared gains after the announcement.[25] Samsung C&T; Corp., the building and trading arm of the group, closed 0.3 percent higher at 73,400 won after gaining 2.7 percent before the announcement.[25] Samsung Heavy Industries is now the world's No. 2 shipbuilder, and the group's construction, insurance, brokerage, and trading units are tops in Korea.[40]
Samsung apologized "for causing concerns," Lee Soon-Dong, president of Samsung's strategic planning office, said, according to a company press release. Samsung was preparing reform plans and plans to outline them in a news conference next week, the release said. [29] "Anyone can guess the future development," Kim said. "And the result already allowed Samsung's Lee and other executives to be cleared of their criminal responsibility in unlawful father-to-son wealth transfer."[23] Two of Lee's aides received a suspended prison term in 1996, for illegally selling a controlling stake in a Samsung subsidiary to Lee's son at a discounted price, but Lee denied involvement at the time.[12] "The negative repercussions on our economy would be very big amid the extremely competitive global economic situation." Mr Lee was also investigated for his role in handing over the reins of power at Samsung to his son.[41]
If found guilty, Mr Lee might expect the court to show him leniency, he added. Samsung is best-known for its electronics unit, but it is also one of the world's largest shipbuilders.[26]
Previous court rulings found that executives arranged for the son to acquire control of Everland, Samsung's de facto holding company, at a below-market price in the mid-1990s through the issue of low-priced convertible bonds.[6] The findings supported claims that the son acquired control of Everland, Samsung's de-facto holding company, at a below-market price in the mid 1990s.[1]
Investigators started looking into Samsung in January after a former company lawyer alleged the company created slush funds worth $200 million.[29] The executives are also alleged to have kept a $200 million slush fund, whose sole purpose was to bribe the likes of politicians and prosecutors.[53]
The prosecutors said that the 66-year-old chairman would not be arrested for fear of "enormous disruptions" to the Samsung management. [41]
The 66-year-old Samsung boss was indicted for evading 112.8 billion won (US$113 million) of taxes and causing losses at Samsung affiliates.[23] Lee was also charged with evading a capital gains tax bill of 112.8 billion won (113.7 million dollars).[2] According to Cho Joon Woong, Lee is guilty of avoiding 113 billion won or US$114.3 million in taxes by using other people's names to execute profitable stock transactions.[46]
The chief investigator reported in Seoul that Lee Kun Hee has reportedly used around 1200 accounts under various names for share transactions and was thus able to peculate '''72 million in taxes.[51]
Lee Kun Hee is not going to jail because the Korean government doesnt want to disrupt the one company responsible for 20% of the countrys exports.[52] The elder Lee could face anywhere from five years to life in prison if convicted, but the precedent has been for lenient treatment of corporate honchos. Given the conglomerate's track record and the country's own history in terms of economic development and structure, there is reason for outside investors to maintain an attitude of skepticism. -- Reuters contributed to this article.[39] Lee Kun-hee could face between five years and life in prison. Analysts said they expected him to escape a jail term if convicted, with leniency shown to several other corporate chiefs in past cases.[6]
The process, led by senior executives, "was reported to Chairman Lee Kun-Hee at that time," the report said.[2] Lee Kun-hee has accepted responsibility for such '''structural problems''' and may consider stepping down from his position as chairman.[38]
Lee Kun-hee received a suspended jail sentence in 1995 for contributing to a slush fund for former president Roh Tae-woo, but was pardoned in 1997.[6] Lee Kun-hee, 66, ranked 605th in Forbes Magazine's 2008 "World's Billionaires" list, with an estimated fortune of 2 billion U.S. dollars.[20]
The investigation has opened a window into the Byzantine ways that the Lees have been able to assert so much control over the far-flung group. [40] In a statement, Samsung apologized "for causing concerns." "Taking this special prosecution investigation as a new starting point, Samsung is preparing reform plans, based on advice from various sectors of our society," it said, adding it would make an announcement on details next week.[15] Investors have virtually ignored the special investigation engulfing Samsung.[27] Despite the seriousness of the problem investors are said to be happy with the investigation's results, as it may force Samsung to expose an otherwise impenetrable management structure, and bring it up to par with other countries around the world.[53]
The investigation was a result of a number of accusations by internal whistleblower Kim Yong Chul, a former Samsung attorney.[50] Former Samsung attorney Kim Yong-chul made allegations late last year about bribery and other corruption.[3] Kim Gyeong-jun rocked last year's presidential election race with a claim that Lee Myung-bak was involved in a 2001 fraud.[6]
Kim also alleged that the Lee family had bribed prosecutors and other government agents.[39]
An investigation found no evidence supporting an allegation that the company bribed government officials and prosecutors, a prosecutor said on Thursday.[29]
In 15 years, flagship unit Samsung Electronics has gone from a mass producer of me-too goods to one of the world's premier brands of cell phones, digital TVs, refrigerators, and memory chips, overtaking Sony ( SNE ) as the world's top electronics company.[40] The scandal does not seem to be slowing the company down; shares in Samsung Electronics have jumped 25 percent since the whistle-blower came forward in November.[34] Shares in Samsung Electronics, for example, have jumped 25 percent since Kim, the former Samsung lawyer, came forward in early November.[14]
Samsung Electronics Co., Asia's biggest maker of computer chips and mobile phones, closed 1.5 percent higher after rising as much as 3.1 percent before the charges were announced.[25]
Samsung has announced to restructure the company to avoid future illegal actions. Legal Notice This article has been edited and published by Evertiq New Media AB. Copying or re-publishing of this news item without permission from Evertiq New Media AB may lead to prosecution. The same applies for the headline. [51] Kim, a Korean-American who was extradited from the U.S. in November to face trial, was also fined US$15 million. He had claimed that Lee Myung-bak was the real owner of a company called BBK, which was linked to the 2001 scam.[6] Samsung-Boss Lee Kun Hee has been charged with fiscal evasion and defalcation.[51] The probe's findings - though bad news for Mr Lee, who technically risks a long prison sentence if convicted - were not quite the dynamite many had predicted.[41] Lee has apparently admitted to some lesser infractions, and sources close to the case said allegations of bribery were not substantiated, Yonhap News Agency reported.[4] Lee was cleared of a more serious allegation of bribery, the media reports said.[7]
The report said Lee's hidden assets amount to 4.5 trillion won. It added that despite extensive raids and tracking of bank accounts, no evidence of bribery emerged.[2]
Spanish newspaper El Pais said the matter related to $114m worth of unpaid tax by Lee and nine other directors.[37] A former business partner of President Lee Myung-bak has been sentenced to 10 years in prison for stock manipulation and embezzlement.[6]
Samsung issued a statement after the indictments, apologizing "for causing concerns" and adding it was "preparing reform plans" that it would announce next week. "The central question is whether they are going to turn this case into an opportunity to reform their corporate governance," said Kim Joongi, a professor of law at Seouls Yonsei University. [31] "The special counsel has failed to cast light on the extent of bribery that has corrupted our country," Kim In-guk, head of the Catholic Priests' Association for Justice, told the Yonhap News Agency.[30] One group, The New Right National Union, posted a statement on the Internet that said the investigation was triggered by "leftists" and the outcome was "fair."[30]
The biggest South Korean conglomerate is said to have bribed officials on a regular basis, which however has not been proven yet. [51] Although South Korea has often been rocked by corruption scandals, the latest has provoked widespread interest because it was caused by a whistle-blower, unusual in South Korea.[33] Korea's family-owned chaebol, or conglomerates, are widely credited with powering the nation into the economic super league, despite frequent charges of corruption and fraud.[17]
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1. AFP: Samsung chief charged with breach of trust: prosecutors
2. AFP: Samsung chief charged with breach of trust, tax evasion
3. Samsung chief indicted on tax charges - Los Angeles Times
4. Samsung probe winding down in Seoul - UPI.com
5. Samsung chairman charged with tax evasion - Times Online
6. SCMP.com - the online edition of South China Morning Post, Hong Kong's premier English-language newspaper
7. Samsung chief Indicted on tax evasion, fraud charges - The Money Times
8. Samsung chief Lee indicted on S. Korean tax-evasion charges - MarketWatch
9. Samsung to unveil reforms following Lee indictment | Markets | Markets News | Reuters
10. VOA News - South Korean Prosecutors Charge Samsung Chief With Tax Evasion
11. Samsung's Mega-Wealthy Boss Indicted in South Korea
12. Printed Circuit Design & Fab - Samsung Chairman to Face Charges
13. Samsung chairman indicted in tax evasion, cleared of bribery (Roundup) - Business
14. The Associated Press: Samsung chairman charged with tax evasion, breach of trust
15. Samsung boss indicted for tax evasion - washingtonpost.com
16. EuroNews EuroNews : Samsung boss facing criminal charges
17. Samsung chairman charged with tax evasion after four-month inquiry - Business News, Business - The Independent
18. JURIST - Paper Chase: Samsung CEO indicted for alleged tax evasion, breach of trust
19. Samsung Head Formally Charged with Fraud - World New News - Digital Trends
20. Samsung's president charged with tax evasion and breach of trust_English_Xinhua
21. FACTBOX: A look at South Korea's powerful Samsung Group | Reuters
22. The Associated Press: Special probe indicts Samsung chief
23. Telecoms Korea News Service - UPDATE: Samsung's Lee Let Off with 'A Slap on the Wrist'
24. Samsung Chief Charged with Tax Evasion, Breach of Trust - International Business Times -
25. Bloomberg.com: Asia
26. BBC NEWS | Business | Prosecutors charge Samsung chief
27. Telecoms Korea News Service - Samsung's Lee Let Off with 'A Slap on the Wrist'
28. Samsung probe findings to be released Thurs: media | Technology | Reuters
29. Samsung chief escapes bribery charge - CNN.com
30. Reaction mixed on Samsung probe - UPI.com
31. Samsung vows reform after chairman indicted on tax evasion - International Herald Tribune
32. Samsung | Samsung's woes | Economist.com
33. Samsungs chairman is indicted for tax evasion in corruption case - International Herald Tribune
34. IP Telephony
35. Current - Samsung to unveil reform plans after chairman's indictment
36. Press TV - Samsung chief charged with tax evasion
37. Samsung boss in tax evasion charge - Financial Director
38. Samsung chairman charged with tax evasion and breach of trust
39. Samsung Chair Escapes Bribery Charges - Forbes.com
40. Samsung Under Siege
41. Samsung chief Lee Kun-hee indicted on tax evasion charge - Times Online
42. PRESS DIGEST - South Korean newspapers - Apr 18 | Industries | Consumer Goods & Retail | Reuters
43. Reclusive Samsung Group head has country under spell | Reuters
44. Reports: Samsung probe wrapping up; special prosecutors to announce results Thursday - International Herald Tribune
45. Samsung head charged with fraud, avoids arrest - ABC News (Australian Broadcasting Corporation)
46. RTTNews - Breaking News, financial breaking News, Positive EPS Surprises, Stock research .
47. Samsung Execs Indicted on Fraud Charges - Gearlog
48. Around The Rings > Home
49. Samsung Chairman Faces Tax Charges [] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
50. RTTNews - Global Business News, Business Newswires, Business Articles, News Analysis.
51. Samsung-Boss charged in bribe scandal :: evertiq.com
52. Samsung Chairman Lee Kun Hee has been indicted for evading taxes
53. Electronista | Samsung chairman indicted in executive scandal
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