Samsung heir given five year prison sentence for bribery

Youkyung Lee, The Associated Press</span>
Published Friday, August 25, 2017 12:41AM EDT
Last Updated Friday, August 25, 2017 4:46AM EDT

SEOUL, Korea, Republic Of - A South Korean court sentenced the billionaire chief of Samsung to five years in prison for bribery and other crimes in a stunning downfall for the heir to South Korea's biggest family fortune and a global consumer electronics empire.

The Seoul Central District Court said Friday that Lee Jae-yong, 49, was guilty of offering bribes to Park Geun-hye when she was South Korea's president, and to Park's close friend, to get government support for efforts to cement his control over the Samsung empire. The revelations that led to Lee's arrest in February fed public outrage which contributed to Park's removal as president.

A panel of three judges also found Lee guilty of embezzling Samsung funds, hiding assets overseas, concealing profit from criminal acts and perjury. Prosecutors had sought a 12-year prison term.

Lee was accused of offering $38 million in bribes to four entities controlled by Choi Soon-sil, a long-time friend of Park, in exchange for government help with a merger that strengthened Lee's control over Samsung after his father suffered a heart attack in 2014.

Samsung has not denied transferring corporate funds. But Lee, vice chairman at Samsung Electronics and the Samsung founder's grandson, claimed innocence during the court hearing. He said he was unaware of the foundations or the donations, which were overseen by other executives.

The closely-watched verdict is the latest convulsion in a political scandal that prompted millions of South Koreans to protest last fall, culminating in the ouster and arrest of Park as well as the arrests of Choi and Lee. Park, who was embroiled in a tumultuous series of scandals, was removed from office in March. She and Choi are both currently on trial.

Judges pointed to an unusual arrangement in which Samsung bankrolled equestrian training for Choi's daughter as proof of Lee's knowledge of what was transpiring.

They said Lee was aware that Park, president at the time, wanted Samsung to sponsor the equestrian training.

Samsung secretively provided a huge amount of money to Choi's Germany-based company that paid for the training and the exorbitantly priced foreign horses worth 3.6 billion won ($3.2 million) were part of the bribes, the verdict said. The attempts to hide Samsung's involvement also constituted crimes, it said. In total, Samsung paid $7.9 million to the German company, the judges said.

The verdict also dealt a blow to Samsung's publicly stated position that recent business dealings or restructuring efforts have nothing to do with the succession of corporate leadership to Lee from his father. Instead, Samsung has insisted that a merger of two Samsung companies at the centre of the scandal was about creating business benefits. Judges rejected Samsung's argument.

"He was set to benefit most from the succession work, which was part of the favours sought from the president," Kim Jin-dong, the head judge, said.

Other former Samsung executives charged with Lee were also found guilty.

Choi Gee-sung, a mentor of Lee, and Chang Choong-ki were sentenced to four years in prison. Two other former executives received suspended prison terms.

The ruling in Lee's case can be appealed twice. Samsung will appeal the ruling immediately, Song Woo-cheol, a Samsung attorney, told reporters.

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