Business

Samsung scandal: Who is Lee Jae-yong?

Lee Jae-yong Image copyright AFP
Image caption The Samsung boss has been thrust into the spotlight

Six months ago, simply finding a photograph of Lee Jae-yong was tricky.

He had just been elected to the board at Samsung Electronics, and one of the few images we could trace showed him as a younger man, smiling, with a name badge clipped to a preppy lilac V-neck sweater.

There are no shortages of pictures now, but smiles and upbeat knitwear are in limited supply. In one striking image, he wears handcuffs, flanked by police.

That is because, while six months ago the biggest charge against Mr Lee was that he had climbed the Samsung ranks because of who he was rather than his abilities, the accusations he faces now are far more serious.

Who is Lee Jae-yong?

The 48-year-old, also known as Jay Y Lee, is the son of Lee Kun-hee, chairman of Samsung Group, Korea's largest conglomerate. He is also the grandson of Samsung founder Lee Byung-chul.

Studying a degree in Seoul before completing a doctorate at Harvard Business School, he has been groomed to take over the firm.

He became a Samsung president in 2009 and in 2013 was made vice-chairman of Samsung Electronics, the division which makes gadgets from smartphones and televisions to cameras and hard drives.

But since Mr Lee's father suffered a heart attack in 2014, he has been considered de facto boss of the entire Samsung group.

Forbes ranks the divorced father-of-two as the 40th most powerful person in the world, with a net worth of almost $6bn (£4.9bn).

Image copyright Reuters

What is he accused of?

In February 2017, Lee Jae-yong was arrested and then charged over his alleged role in a political and corporate scandal, linked to South Korea's impeached president, Park Geun-hye.

He is is the most high-profile figure arrested in the investigation. Charges against Mr Lee - who denies wrongdoing - include bribery, embezzlement, hiding assets overseas and perjury.

Samsung is accused of paying 43bn won ($36.4m; £30.3m) to two non-profit foundations operated by Choi Soon-sil, a friend of Ms Park, in exchange for political support.

Those favours are alleged to include backing for a controversial Samsung merger which paved the way for Mr Lee to become eventual head of the conglomerate, a deal that needed support from the national pension fund.

At a parliamentary hearing in December last year, Mr Lee admitted making donations but denied Samsung wanted anything in return. It is a stance the company has since repeated.

He also confirmed the firm separately gave a horse and several million dollars to help the equestrian career of Ms Choi's daughter.

Image copyright EPA
Image caption Mr Lee's biggest product launch to-date had been the ill-fated Galaxy Note 7

Mr Lee is being charged along with four other Samsung executives - three of who have since resigned.

If convicted he could face up to 20 years in prison.

What does this mean for Samsung?

Samsung is hugely important to the South Korean economy, with sales equivalent to about a fifth of the country's GDP.

It is what is known in a chaebol, a term specific to the country which refers to large family-owned conglomerates that typically have global operations. Others include LG, Lotte and Hyundai.

Experts on these family businesses say Samsung's top boss has traditionally played a passive role in day-to-day operations.

Given Mr Lee was only recently elevated to the group's board, his arrest and subsequent court case should have limited impact on business decisions made at the firm.

But it will do nothing for the company's reputation, already smarting from the botched recall, re-release and eventual scrapping of its flagship smartphone, the Galaxy Note 7.

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