Despite anger, Samsung heir Lee's release lifts hopes for new jobs, investment

CJ

06/02/2018 09:36

* Public divided on Lee's freedom after Monday's ruling 
    * Investments could "help calm public ire"- business 
lobbyist 
    * Past cases of freed leaders show more investment, M&A, 
jobs 
    * Lee's hands may be tied pending Supreme Court ruling 
 
    By Joyce Lee and Ju-min Park 
    SEOUL, Feb 6 (Reuters) - Samsung Group heir Jay Y. Lee's 
release from jail on bribery charges has some in South Korea 
hoping for new investments and jobs from the massive 
conglomerate, despite ongoing concerns over the cosy ties 
between government and business leaders.  
    Dubbed the "Republic of Samsung," the company's businesses 
reach deep into many parts of South Koreans' lives, and are 
intertwined with thousands of small and medium-sized 
subcontractors and start-ups.  
    After a year in detention, the heir to South Korea's largest 
business empire walked free on Monday as an appeals court 
suspended his jail term for bribery in a corruption scandal that 
toppled the former president last year.  urn:newsml:reuters.com:*:nL4N1PV2N2 
    Many South Koreans in the business community welcomed Lee's 
release and anticipated the national economy would feel positive 
effects from his comeback, including new investment in local 
industries and more domestic jobs.  
    That could help ease a backlash from other South Koreans 
upset over the cosy ties between politicians and the powerful 
family-run conglomerates, or chaebols, which have been 
implicated in a series of corruption scandals in recent decades, 
several business lobby groups and corporate analysts told 
Reuters.  
    "Parts of our community feel Lee's suspended jail sentence 
is against the people's will, but if he continued to stay in 
jail, it would have been a burden not just to Samsung but to all 
its countless subcontractors here," said Kim Kyung-man, head of 
economic policy for the Korea Federation of SMEs, a lobby group 
for small and mid-sized firms.  
    "One good thing about having the owner of the conglomerate 
back is he can make decisions quickly. We are looking forward to 
any action to boost the economy by Samsung, our global brand, 
which also can help calm public ire," he said.  
    A Samsung spokeswoman declined comment.  
     
    PAST INVESTMENTS  
    Samsung investors said Lee may follow the model of other 
suspended or jailed chaebol leaders who made bold moves for 
their companies once reinstated.  
    Since food-to-entertainment CJ Group's chairman returned in 
May 2017 after being pardoned for tax evasion and breach of 
trust, the company has carried out a slew of acquisitions and 
investments.  urn:newsml:reuters.com:*:nL2N1LB0P1  
    The increased investment since Lee Jay-hyun rejoined 
management likely boosted employment at CJ Group last year, a 
company official said, but detailed numbers have not yet been 
compiled for 2017.  
    Energy-to-semiconductor producer SK Group, South Korea's 
third-largest conglomerate, has been on a growing investment 
spree since 2015, when Chairman Chey Tae-won was granted a 
presidential pardon over his conviction for embezzlement. 
    SK's memory chip unit has been investing heavily, while SK 
units acquired chip material maker LG Siltron and became part of 
the winning bid for Toshiba Inc's chip unit.  urn:newsml:reuters.com:*:nL4N1M82SS 
    Samsung has some history of its own.  
    Lee's father was convicted of tax evasion in 2009, and had a 
three-year sentence suspended, with judges citing his 
"contribution to the country's economic development" and his 
"patriotism through business enterprise from job creation".  
    The elder Lee was later pardoned, allowing him to lead the 
campaign to secure the 2018 Winter Olympics for South Korea. 
    "Whenever a major chaebol leader has been released from 
jail, they have tended to increase social contribution," said 
Park Ju-gun, head of research firm CEO Score. "Samsung also 
could become active in supporting public works such as the 
current administration's drive to increase jobs."  
          
    SETBACK FOR MOON 
    The suspension of Lee's sentence represents a setback for 
South Korean President Moon Jae-in, however, who was elected in 
May on a platform of getting tough with conglomerates and ending 
the practice of pardoning corporate tycoons convicted of 
white-collar crime.  
    It may also be difficult for Lee and Samsung to make any 
high-profile moves just yet, legal experts and corporate 
analysts say. The Supreme Court is expected to make a final 
ruling on his guilt or innocence.  
    "South Korean trial proceedings take into account the 
after-the-fact attitude of the defendant when sentencing, like 
whether the defendant is regretful, has made restitutions, and 
is living conscientiously since," said Rha Seung-chul, a lawyer 
specializing in corporate law.   
    "Lee will be very careful in how his actions are perceived." 
    Samsung, a symbol of the country's dramatic rise from 
poverty following the 1950-53 Korean War, has long been revered 
for helping catapult the country into a global economic 
powerhouse, with crown jewel Samsung Electronics  005930.KS  
alone accounting for about 20 percent of South Korea's total 
exports.  
     But frustration has grown that the wealth amassed by the 
largest conglomerates has not trickled down to average workers 
in Asia's fourth-largest economy.  
    Youth unemployment hit a record high of 9.9 percent in 2017, 
while one-third of workers were in temporary jobs paid less then 
regular positions, according to latest data from Statistics 
Korea.   
    "It is true that in South Korea there's two big different 
public perceptions towards the Samsung family. Dislikes versus 
hopes," a fund manager that invests in Samsung Electronics 
shares said.  
 
 (Reporting by Joyce Lee and Ju-min Park; Editing by Soyoung Kim 
and Lincoln Feast) 
 ((jungyoon.lee@thomsonreuters.com; +82 2 3704 5609; Reuters 
Messaging: jungyoon.lee.thomsonreuters.com@reuters.net)) 
 
Keywords: SAMSUNG LEE/