Samsung chief’s pending parole heralds a shake-up for South Korea
Vice-chair Jay Y Lee’s return to the helm may expedite a $17bn investment plan in the US or a major M&A
Seoul — Samsung Electronics vice-chair Jay Y Lee will be released from prison on Friday after a justice ministry committee recommended that he receive parole, marking a dramatic reversal for South Korea’s political and business landscape ahead of a presidential election early next year.
The justice ministry decided on Monday to grant parole to the de facto leader of Samsung two days before Liberation Day on August 15, justice minister Park Beom-kye said during a briefing. Authorities reached the decision after taking into account Lee’s “emotions towards society and his attitude during incarceration”, as well as the effect of the prolonged Covid-19 outbreak on the national and global economies, Park said.
Lee, 53, was sent back to jail for a second time in late January, after he was convicted of using bribery to win support for his formal succession at Samsung. The billionaire served six of the 18 months he had been expected to spend behind bars during his second stint, on top of the year he was incarcerated before his initial released in 2018.
In the months since his imprisonment, a supply crunch in the global semiconductor industry and Samsung’s role in facilitating a Covid-19 vaccine deal with the US have fanned calls from business leaders and politicians to free the de facto head of South Korea’s largest conglomerate and chipmaker. Still, activists have criticised any decision to free Lee, saying the move is proof of preferential treatment for the country’s powerful tycoon class known as chaebols.
The decision reflects President Moon Jae-in’s dilemma between defending his political legacy and helping his party ahead of the next presidential election. Convicted chaebol leaders, including Lee’s father, Lee Kun-hee, had typically received pardons instead of paroles by past presidents. But granting parole is seen as less risky, as it can be approved by the justice minister without seeking consent from the president, who was elected four years ago on a progressive platform that included the overhaul of chaebol business practices.
While Lee is set to be released from jail ahead of Liberation Day, the billionaire still needs to seek exemption from a five-year employment restriction before he can return to running the conglomerate.
Lee’s return to the helm at Samsung could expedite key initiatives, such as a $17bn investment plan in the US or major mergers & acquisitions (M&A). The company has announced plans to build an advanced chipmaking plant in the US, in hopes of winning more American clients and narrowing the gap with industry leader Taiwan Semiconductor Manufacturing Company. Its pledge to build a US manufacturing base had helped facilitate Samsung’s deal with Biologics to manufacture Moderna’s vaccines, Bloomberg News previously reported.
“If Lee is pardoned on the National Liberation Day of Korea, we believe Samsung would actively look for more large-scale M&As to drive long-term growth,” Citigroup analyst Peter Lee said in a note. “Large scale M&As need a sign-off from Lee, which was lacking due to his absence. Management remains committed to utilise its cash reserve to complete a meaningful M&A over the next three years.”
Even though Lee is set to be released, he still faces the prospect of returning to prison if he is convicted of other charges. The billionaire is being prosecuted in a separate case involving the merger of two subsidiaries, while he also faces trial for alleged illegal anesthetic use.
Bloomberg News. For more articles like this please visit Bloomberg.com
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