Ex-Samsung Chairman Gets Suspended Sentence

Former Samsung Chairman Lee Kun-hee Wednesday was cleared of charges of illegally transferring his managerial rights to his son by issuing convertible bonds of Samsung Everland at low prices.

The Seoul Central District Court dismissed the case involving a BW (bond with warrant) bond sale at Samsung SDS since the statute of limitations had expired. However, the court found the former Samsung chairman guilty of tax evasion by using others’ bank accounts and of failure to report on possessed stocks.

The Seoul Central District Court (Judge Min Byung-hoon) sentenced the former Samsung leader to a three-year jail term suspended for five years and fined him 110 billion won (U.S.$110 million).

On issuing bonds at low prices, the major issue of the trial, the judge said, “It`s difficult to say that issuance of the CB is definitely illegal, and that Lee committed breach of trust."

The court also sentenced Lee Hak-soo, former Samsung vice chairman, to 2.5 years in prison suspended for five years and fined him 14 billion won for tax evasion between 2003 and 2004, and sentenced him to another 2.5 years in prison suspended for five years and fined him 60 billion won for tax evasion between 2005 and 2007.

Kim In-joo, former president of the group`s defunct Strategic Planning Office, was given three years in prison suspended for five years and fined 74 billion won, and Choi Kwang-hae, vice president of Samsung Electronics, was sentenced to three years in prison suspended for four years and fined 40 billion won.

Those accused of issuing convertible bonds at low prices such as Hyun Meong-kwan, former chief secretary, and Yu Seok-ryul, CEO of Samsung Card, were found not guilty, and those indicted for issuing bonds with warrant including Kim Hong-ki, former CEO of Samsung SDS, and Park Ju-won, chief management secretary, were acquitted.

Special Prosecutor Cho Joon-woong said he was dissatisfied with the ruling and will lodge an intermediate appeal.

bell@donga.com