Samsung heir found guilty of corruption and sentenced to five years in prison. A bribery and cronyism scandal that has already toppled a South Korean president has claimed a major business scalp after a court sentenced Lee Jae-yong, the acting chairman of Samsung, to five years in prison after finding him guilty of offering bribes and other crimes.

The billionaire, who is South Korea’s third-richest man and heir to the sprawling Samsung empire, had been accused of making large donations to foundations run by a close friend and confidante of the deposed South Korean president, Park Geun-hye, in return for political favours.

The court said Lee had provided bribes anticipating support from Park, who was still president at the time, according to South Korea’s Yonhap news agency. Lee’s lawyers are expected to appeal, and the case could end up being decided by the country’s supreme court, possibly next year.

There had been huge public pressure on the court to deliver a guilty verdict after the wide-ranging scandal swirling around Park ended in her impeachment last year and calls for South Korea to address decades of collusive ties between senior politicians and big business.

While the 49-year-old, who is also known as Jay Y Lee, was spared the 12-year term demanded by prosecutors, his sentence is the longest given to any South Korean chaebol leader. His conviction could also have consequences for Park, who faces a possible life sentence when a ruling in her case is given later this year.

More than 450 people applied for the 30 seats in the public gallery to witness what South Korean media billed as the “trial of the century”. Outside, hundreds of riot police were deployed to prevent confrontations between critics and supporters of Lee and Park, a former dictator’s daughter who was elected South Korean’s first female president in late 2011.

Despite claims by his legal team that Lee had little involvement in the day-to-day running of Samsung, the court ruled that he had approved donations to Park’s friend, Choi Soon-sil, in return for securing government support for the contentious merger of two Samsung affiliates that would strengthen his control over the group.

Since his arrest in February, Lee has insisted the payments were made to Samsung without his knowledge, and with no expectation of favours from the Park administration.

Lee, the scion of South Korea’s richest family and its biggest company, had been accused of offering $38m (£30m) in bribes to four entities controlled by Choi, to whom Park often turned for advice and allegedly gave access to government documents even though she did not have security clearance.

Choi is alleged to have set up the foundations to support Park’s policy initiatives. Samsung has not denied donating money to the foundations, but said it was forced to do so by Park.

Samsung was also accused of separately giving Choi billions of won to fund her daughter’s equestrian training in Germany. In return, Lee allegedly sought government approval for the $8bn merger of two Samsung affiliates in 2015 – a move that would cement his control of the Samsung group. The merger was opposed by many shareholders, but went through after the national pension fund – a major Samsung shareholder – approved it.

The case has all but ended Lee’s attempts to exert total control over the Samsung group, of which he has been the de facto head since his father suffered a heart attack in 2014. Investors are concerned that his enforced absence will create a leadership vacuum at Samsung – which has dozens of affiliates and assets of $322bn – and harm its ability to make key strategic decisions.

Other business figures to have stood trial in South Korea have traditionally received light sentences, fueling criticism that leaders of the country’s family-run conglomerates – or chaebol – are treated with unwarranted leniency by the courts. They included Lee’s father, Lee Kun-hee, who was convicted of tax evasion in 2009 and had a three-year sentence suspended, with judges citing his contribution to South Korea’s economic success and his “patriotism through business enterprise from job creation”. He was pardoned four months after the final ruling.

Park Sangin, a professor of economics at Seoul National University, said shortly before the verdict: “Chaebol leaders used to get the same sentencing every time. There was even a saying called the ‘3-5 law’ – three years sentencing, five years’ probation. “If Lee receives a heavy sentence, it can be seen as the shattering of the ‘too-big-to-jail’ trend of the past.”

South Korea’s new president, Moon Jae-in, won a landslide victory in May pledging to rein in the chaebol and end clamps down on white-collar crime involving corporate tycoons.

25 August 2017

The Guardian

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