Samsung heir braces for South Korea's Supreme Court ruling in ex-president bribery case

Samsung heir is involved in a scandal that unseated the president and trained public ire on corporate untouchables.

Samsung Group will discover the fate of its de facto leader on Thursday as South Korea's Supreme Court rules whether to uphold the bribery conviction of Jay Y Lee, in a scandal that unseated the president and trained public ire on corporate untouchables.

The ruling will also determine how much Lee, 51, can focus on steering the group's flagship Samsung Electronics Co Ltd through falling profitability and Japanese export curbs on materials crucial for the world's leading chipmaker.

The Supreme Court is also set to rule on appeals court decisions in the case against former President Park Geun-hye, who was impeached following the scandal and is serving a 25-year prison sentence on charges including bribery.

How is Samsung involved?

In late 2016, prosecutors arrested Park's friend Choi Soon-sil on suspicion of exerting inappropriate influence over state affairs after Park allowed Choi to edit draft speeches.

Court documents showed Park pressed conglomerates including Samsung Group to make donations to Choi-backed foundations and separately asked Samsung to support the equestrian training of Choi's daughter.

Park was impeached in March 2017, making her the country's first democratically elected leader to be ousted from office. At her trial, she denied wrongdoing.

Samsung heir Lee was arrested a month earlier, accused of seeking presidential favours in exchange for extending Choi financial support. Samsung and Lee denied wrongdoing.

Samsung Electronics Vice Chairman, Jay Y. Lee, arrives at a court in Seoul, South Korea, October 12, 2017.  REUTERS/Kim Hong-Ji - RC1CEC6A3760

Samsung Electronics Vice Chairman, Jay Y. Lee, arrives at a court in Seoul, South Korea, October 12, 2017. Image: Reuters

What decision can the Supreme Court take?

Lee was found guilty in August 2017 on charges including bribery and embezzlement and received a five-year jail term. He was released five months later after an appeals court halved and suspended the sentence.

Both Lee and prosecutors appealed to the Supreme Court, which can uphold the appeals court's ruling or ask it to reconsider its judgment. The latter could lead to the conviction being overturned or to a tougher sentence, legal experts said.

A sentence any longer than three years would mean immediate incarceration as a suspension is only permitted for terms of up to three years.

What are the sticking points?

The case centres on whether three horses donated by Samsung for the training of Choi's daughter should be considered bribes aimed at winning Park's favour.

Court documents showed Park asked Lee to help the daughter, and was convicted on grounds that the horses were bribes worth 3.7 billion won (2.48 million pounds). However, the horses were not recognised as such in Lee's trial, helping reduce his sentence.

The court may also rule on whether there were any quid-pro-quo dealings between Park and Lee. Ruling in the affirmative could increase the severity of their punishment.

What does it mean for Samsung?

Lee is poised to take control of the Samsung Group from his aged father. His titles include vice chairman of Samsung Electronics, the world's biggest maker of smartphones and memory chips.

Samsung Electronics is currently battling falling profitability as prices of chips and display panels slide.

It also has to contend with Japan's decision last month to restrict exports of chipmaking chemicals to South Korea following a diplomatic dispute. Japan dominates the market for the restricted chemicals.

Lee has since embarked on a high-profile mission to tackle what he called a "crisis".

Other group headaches include investigations at Samsung BioLogics Co Ltd which prosecutors suspect breached accounting rules.

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