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Samsung boss Lee Jae-yong in trouble again – this time over financial filings
Fair Trade Commission concerned false paperwork took years to decipher
Samsung boss Lee Jae-yong is in trouble – again – this time over false filings about the extent of his shareholdings.
Korean law requires owners of large businesses to disclose details of affiliate companies they control, or in which family members have an interest. The requirements aim to prevent unfair cross-investment in "Chaebol" – giant industrial conglomerates in which founding families often retain ownership and/or influence. The nation's economy is unusually concentrated in such entities.
Samsung is the largest Chaebol, and also the largest contributor to South Korea's economy. By some measures it accounts for 20 per cent of the nation's exports, stock exchange capitalization, and perhaps as much as 17 per cent of gross domestic product.
That dominance means Chaebols and their leaders are afforded treatment that lesser companies struggle to secure. For example, Lee Jae-yong was effectively pardoned despite prosecutions for bribery, concealment of criminal proceeds, and embezzlement – on grounds that South Korea needs him back at work instead of languishing in prison. Lee was also fined for drug abuse in 2021 and has a long rap sheet filled with other infractions of South Korean corporate law.
South Korea's Fair Trade Commission yesterday called out Lee for filing false statements about his affairs during 2019/2020 – which matters because black letter law requires accurate filings, and the wider Lee family has been embroiled in disputes about whether it has paid the proper amount of inheritance taxes. Those deliberations were complicated, in part, by the complex ownership structure of Samsung's many businesses.
No immediate action will follow the Commission's displeasure.
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For now, Lee's tenure appears secure. Despite his many scandals, Samsung Electronics – the Chabeol's biggest business – is growing strongly. Last week the company announced earnings guidance that predicted operating profit of ₩14.1 trillion ($11.6B) on revenue of ₩77 trillion ($62B) – growth of 50 per cent and 18 per cent respectively, year-on-year.
While Samsung continues to soar, the business has lost its luster for younger members of the Lee family who have decided that the family business is not to be their calling. The current boss is therefore likely to be the last of his line to helm the Chaebol. ®