Lee Jae-Yong, the heir to the Samsung empire, has been sentenced to five years in prison on charges of bribery and embezzlement of funds. The scandal had earlier brought down former South Korean president Park Geun-Hye.
The vice-chairman of Samsung Electronics was found guilty of bribery, embezzlement, perjury and other charges centred on payments and promises by Samsung totalling 43.3 billion won (around USD 40 million) to Park’s secret confidante Choi Soon-Sil.
The court found the money was in return for policy favours including government support for Lee’s hereditary succession at the group, after his father was left bedridden by a heart attack in 2014.
The defence had denied the charges, saying Samsung was pressured by Park to make the donations under duress. The defence also said that Lee was not aware of them and did not approve of them. Four other top Samsung executives were also convicted and received sentences of up to four years.
The court said Park was aware that Lee wanted state approval for a controversial merger of two Samsung units in 2015, seen as a key step to ensuring his accession.
The deal was opposed by shareholders who said it wilfully undervalued shares of one of the firms. But it eventually went through after the national pension fund — a major Samsung shareholder — approved it.
The ruling is seen as a strong indicator of the likely outcome in Park’s trial, as some of the charges against the ousted head of state are inextricably linked to the accusations Lee faced.
Samsung is reported to be the world’s biggest smartphone maker and Lee’s conviction could hamper the firm’s ability to make key investment decisions.
Demonstrators had gathered around the court ahead of the verdict. Around 800 riot police were deployed around the court to prevent possible clashes between rival sets of demonstrators.
Some of them who had targeted Park last year, also protested against Lee and other chiefs of the chaebols as the family-controlled conglomerates that dominate Asia’s fourth-largest economy are known.
The verdict could add impetus to new President Moon Jae-In’s campaign pledges to reform the chaebols.
South Korea’s GDP is still growing but social and economic frustrations have mounted over the benefits not being equally shared.
Park’s own trial began in the same room in May, and it also saw Lee’s father Lee Kun-Hee convicted of tax and other offences in 2008, receiving a suspended sentence.
The firms have long had murky connections with political authorities in South Korea, and past trials of their leaders have often ended with light or suspended sentences, with courts citing their contributions to the economy.
The Lee clan directly owns about five per cent of Samsung Electronics shares, but maintains its grip on the wider group through a byzantine web of cross-ownership stakes involving dozens of companies.
Lee has been Samsung’s de facto leader since his father fell ill, but his lawyers and ex-members of the former elite Future Strategy Office (FSO), which dictated the vast group’s overall direction and major business decisions, sought to portray him as naive and inexperienced.
Samsung appears to have been unaffected by Lee’s absence so far — he was detained in custody in February — with flagship subsidiary Samsung Electronics making record profits on the back of strong demand for its memory chips.
(With inputs from PTI)