Asia Pacific / Crime & Legal

Samsung chairman Lee Kun-hee named as suspect in $7.5 million tax evasion case

Reuters

Samsung Electronics’ ailing chairman, Lee Kun-hee, was named by South Korean police on Thursday as a suspect in an 8.2 billion won ($7.5 million) tax evasion case that involved the use of bank accounts held by employees.

The development is the latest in a series of scandals that have dogged the family behind Samsung, the country’s biggest business empire.

The chairman’s son Jay Y. Lee, heir to the Samsung Group, was released from detention earlier this week after an appeals court halved his sentence for bribery and corruption to two and a half years and suspended it for four years.

Following a heart attack in 2014, the elder Lee, 76, has remained hospitalized in Seoul’s Samsung Medical Center. It is difficult for him to communicate and he has shown little sign of recovery. Until his imprisonment, Jay Y. Lee had been regarded as the de facto head of the group.

Police said the elder Lee could not be questioned due to his physical condition. Samsung declined to comment.

“Samsung chairman Lee Kun-hee and a Samsung executive managed funds in 260 bank accounts under names of 72 executives, suspected of evading taxes worth 8.2 billion won,” Korean National Police Agency said in a statement. The agency plans to send the case to prosecutors.

Police added that the accounts, holding some 400 billion won, were found in the course of their probe into alleged improper payments for the renovation of Lee’s family residence.

The investigation into tax evasion harks back to the late payment of 130 billion won in tax in 2011, though only 8.2 billion of that sum falls within the statute of limitations, according to police.

The graft case that led to the younger Lee’s arrest last year and brought down South Korea’s former president Park Geun-hye prompted Samsung to vow to improve transparency in corporate governance and grant heads of the group’s affiliates more autonomy from the Lee family.

The group dismantled its corporate strategy office in late 2017.

The new liberal government led by President Moon Jae-in elected after the corruption scandal promised to put family-run conglomerates under stronger scrutiny and end the practice of pardoning corporate tycoons convicted of white-collar crimes.

Though Jay Y. Lee has not been seen back at the office since his release on Feb. 5, members of the Korean business community expect him to take up the reins once again, and invest more in the business to create jobs that might help soothe public anger.

Returning home from prison, the younger Lee apologized for not having shown his best side. He said he would do his best, but did not give specifics on his business plans.

During his year behind bars, Samsung Electronics — the world’s top semiconductors maker — earned a record profit as it benefited from a memory chip “super cycle.”

Thursday’s developments are not the first time the elder Lee has been investigated for tax evasion. He was convicted in 2009 and later pardoned for tax evasion after becoming embroiled in a scandal that also involved the use of accounts held by trusted employees.

Police say they have since identified more such accounts.