Billionaire Samsung heir Lee Jae-yong jailed for five years

Prosecutors had demanded a 12-year jail term for him on charges of offering or pledging 43.3 billion won of bribes to win the government's approval for a merger of two Samsung units under terms created to increase his control over the entire empire so as to cement a power transfer from his ailing father Lee Kun-hee.

Samsung made no comments on the sentence, but Lee's lawyers said they are appealing. Two other executives received suspended prison terms. "We management are also distressed", he wrote in an internal message, seen by Reuters, to Samsung Electronics staff on Monday.

"As a legal professional, I can not possibly accept any part of the lower court's guilty verdicts", said Song Wu-cheol, lead defense attorney, who added, "I am confident that the appeals court will definitely find the defendants not guilty on all counts".

When millions of people took to the streets to demand president Park Geun-hye's ouster over a burgeoning corruption scandal, their anger was directed nearly as much at the companies that paid her secret confidante Choi Soon Sil, as at her. Park, who was embroiled in a tumultuous series of scandals, was removed from office in March.

The closely-watched verdict is the latest convulsion in a political scandal that prompted millions of South Koreans to protest last fall, culminating in the ouster and arrest of Park as well as the arrests of Choi and Lee.

Payments were said to include $6.4m in supporting the equestrian career of Choi's daughter. Twice convicted of tax evasion and bribery, the elder Lee never spent any time in prison.

There has not been a major tumble among Samsung affiliates since the imprisonment of Lee. With Lee in prison, wheeling and dealing with the leaders of Silicon Valley may be more hard, and other major moves could be slowed.

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Samsung is by far the biggest of the chaebols, with its revenues equivalent to around a fifth of the country's GDP.

"Cronies inside Samsung will start taking sides, and this is a risky situation you can't control from a jail cell", he said. The court ruled that tapping into the publicly traded company's funds to raise the W8 billion constituted embezzlement, and W3.7 billion of that money was illegally transferred to Germany, where Chung was living. But in South Korea they have come to be viewed more skeptically.

But as GDP growth has slowed, public frustration with the chaebols has mounted.

"The court should have considered that (Samsung) did not have a criminal intent, but wanted to avoid trouble if it refused the government's request", Yonhap News Agency quoted an official from a local business group as saying on Friday. Some were pardoned and others got sentences reduced on appeal.

Even so, it is not clear whether the victory will galvanize broader anti-graft efforts.

"Samsung Electronics Vice-Chairman Kwon Oh Hyun is expected to contribute to minimizing the leadership vacuum for the time being". "But it will face consistent calls from business lobbies to pardon Lee Jae-yong".

  • Delia Davidson