South Korea’s Yoon Pardons Samsung’s Jay Y. Lee to Fight ‘Economic Crisis’

  • Samsung scion spent 18 months in prison for bribery
  • S.Korea says leaders needed to help overcome economic crisis
  • Samsung may increase investment with Lee grace – analysts

SEOUL, Aug. 12 (Reuters) – South Korean President Yoon Suk-yeol on Friday pardoned Samsung Electronics (005930.KS) Vice Chairman Jay Y. Lee, with the South Korean Ministry of Justice saying the company’s chief was to be a “national economic crisis”.

The pardon is largely symbolic, with Lee already paroled after 18 months in prison for bribery related to his time as leader of the world’s largest manufacturer of smartphones and memory chips.

However, the pardon would mean that Lee will be able to conduct business more freely and could herald some major investments from Samsung, analysts said.

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“As we urgently need to overcome the national economic crisis, we have carefully selected economic leaders who lead the national growth engine through active investment in technology and job creation to gain pardon,” Justice Minister Han Dong Hoon said at a briefing .

Lee, a descendant of Samsung’s founding family, welcomed the decision and pledged to work hard for the national economy.

“I will contribute to the economy with continued investment and job creation and return the greetings of the people and the government,” Samsung said in a statement, citing Lee.

Also pardoned pro-business president Yoon was Lotte Group chairman Shin Dong-bin, who was sentenced to two and a half years in prison on bribery charges.

“We sincerely thank the decision of the government and the people to grant a pardon, and Chairman Shin Dong-bin and Lotte associates will contribute to overcoming the complex global crisis,” Lotte said in a statement.

COMEBACK

South Korea, which is dependent on technology and exports, is grappling with rising inflation and signs that Asia’s fourth-largest economy is struggling with dwindling demand, poor sentiment and declining spending. read more

Analysts have long expected decisions on major M&A projects and investments once Lee is back in service, and company sources say such decisions should only be made by Lee.

“This removes the employment restriction that Lee was technically under,” said Park Ju-gun, head of the Leaders Index research firm.

“And projects pursued by Samsung, such as major mergers and acquisitions or investments, these could be linked to the pardon. There is a good chance that announcements will be made in the future.”

Even before Lee received the presidential pardon, Lee was back in the spotlight, appearing with President Yoon and US President Joe Biden in May when they visited Samsung’s Pyeongtaek chip manufacturing facilities.

He also visited Europe in June to meet Peter Wennink, CEO of ASML Holding NV (ASML.AS), and discuss the adoption of key high-end chip devices. read more

Last November, Samsung decided on Taylor, Texas as the site of a new $17 billion chip factory. read more

While experts say Lee can now participate more freely in management, his legal risks still exist due to an ongoing lawsuit accusing him of fraud and stock manipulation.

“His trial will allow Lee to face another jail term if convicted. However, the presidential pardon gives him some flexibility to deal with major management issues for now,” said Lee Kyungmook, a professor at Seoul National University’s Graduate School of Business.

Samsung’s top executives hinted at possible upcoming acquisition activities earlier this year. Samsung Electronics has not struck a high-profile deal since it completed its $8 billion purchase of audio electronics maker Harman in 2017.

While macroeconomic factors, such as a decline in demand, can weigh on investment decisions, Samsung has a huge war chest.

Samsung Electronics’ cash balance rose slightly to 125 trillion won ($95.13 billion) at the end of June, from 111 trillion a year earlier.

Shares in Samsung Electronics were up 1% versus benchmark KOSPI’s (.KS11) 0.1% increase. Shares of Lotte Corp (004990.KS) fell 0.8%.

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Reporting by Joyce Lee, Soo-hyang Choi, Heekyong Yang; Edited by Lincoln Feast

Our Standards: The Thomson Reuters Trust Principles.

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