SEOUL (Reuters) – A South Korean court sentenced Samsung Electronics vice president Jay Y. Lee to two and a half years in prison, the court said on Monday, which will have major ramifications for its leadership in the giant technology, as well as Korean opinions for big business.
With that, Lee will be removed, for now, from the main decisions of Samsung Electronics, which strives to outperform its competitors. Nor will he be able to oversee the inheritance process of his father, who died in October, crucial to maintaining control of Samsung.
Lee, 52, was convicted of bribing an associate of former President Park Geun-hye and imprisoned for five years in 2017. He denied any wrongdoing, the sentence was reduced and suspended on appeal and he was released after serving a year.
The Supreme Court then sent the case back to the Seoul High Court, which issued Monday’s decision.
The Seoul Superior Court found Lee guilty of bribery, embezzlement and concealment of criminal proceeds worth about 8.6 billion won ($ 7.8 million), and said the independent compliance committee created by Samsung earlier last year has not yet become fully effective.
“(Lee) has shown a willingness to manage with recently stronger compliance, since he promised to create a transparent company,” said Chief Justice Jeong Jun-yeong.
“Despite some shortcomings … I hope that over time, this will be seen as a milestone in the history of Korean companies as a start of compliance ethics for a bigger leap,” he said.
Lee, dressed in a dark coat and silver tie and standing to hear the sentence, sat down after it was read.
“The nature of this case is the ex-president’s abuse of power, violating corporate freedom and property rights. Given this nature, the court’s decision is regrettable, ”Lee’s lawyer, Lee In-jae, told reporters.
With Lee returning to prison, the year he served time is expected to count towards the sentence – leaving 18 months of his sentence to serve.
Monday’s sentence could be appealed to the Supreme Court within seven days, the judge said, but legal experts said that since the Supreme Court has ruled on this once, chances are less that its legal interpretation will change.
Samsung Electronics’ shares fell up to 4% after the decision, while shares of affiliates such as Samsung C&T, Samsung Life Insurance and Samsung SDI also fell sharply.
Reporting by Joyce Lee; additional reporting by Choonsik Yoo. Gerry Doyle Edition