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Samsung Heir Lee Jae-yong Released in Surprise Decision

By Troy Stangarone

To the surprise of even Lee Jae-yong, the Seoul High Court has reduced his sentence related to charges in the scandal surrounding former President Park Geun-hye and suspended his sentence resulting in his immediate release from prison.

After having been convicted on five charges in August of 2017 related to bribery, embezzlement, and the illegal transfer of funds overseas, Lee Jae-yong was sentenced to five years in prison. However, the South Korean appellate court dismissed some of the charges and reduced the amount in the bribery conviction. As a result, his sentence was reduced to two years and six months and immediately suspended for four years.

In deciding to reduce Lee Jae-yong’s sentence and suspend the remainder, the Seoul High Court both demonstrated its independence and left the appearance that little has changed as a result of the scandal surrounding former President Park. At a time when the Moon administration is making an effort to remove prior areas of corruption in South Korean society and public sentiment has favored stronger sentencing against the heads of chaebols convicted of crimes, the Seoul High Court demonstrated a degree of independence by not simply issuing a ruling that would have received favorable political reviews.

However, at the same time by reducing Lee Jae-yong’s sentence to two years and six months while also suspending it for four years, the court also has left the impression that there is a different standard of justice for those who run the chaebol and the rest of society. In the last decade, Lee is among six chaebol heads convicted of white collar crime to end up with suspended sentences or pardons and on the surface this seems to continue that pattern.

Interestingly, the court’s decision ultimately rested on the idea that while Lee Jae-yong and others at Samsung knew that they were engaged in bribery, but that they could not refuse to take part as they were pressured by President Park, the most powerful individual in South Korea, and her friend, Choi Soon-sil. This may have implications for policy makers going forward in efforts to address bribery.

The anti-corruption Kim Young-ran law only came into effect in September of 2016. The law prohibits private citizens from giving gifts to government officials above a certain amount and officials from soliciting bribes. Since the law came into effect after the bribes in the Samsung case took place, it is not applicable as it would place officials and Samsung executives into an ex post facto judgement. However, the only references to coercion in the law relate to efforts prevent the report of bribery. This could create moral hazard where officials in the future continue to ask bribes of the chaebol, who then pay knowing that coercion will lead to their acquittal in court. Instead what may be needed to ensure corporate bribery ends is something similar to the Foreign Corrupt Practices Act making even the act of bribery under coercion illegal for a business person.

While the court’s decision is positive for Lee Jae-yong and Samsung, it may not be the final outcome. Both Samsung and the prosecutor’s office have suggested that they may appeal to the Supreme Court. Samsung hopes to have the remaining convictions against Lee Jae-yong overturned, while the prosecutor’s office would seek to have the appellate court’s ruling overturned. The Supreme Court could decide to uphold the Seoul High Court’s ruling or send the case back for further review.

Troy Stangarone is the Senior Director for Congressional Affairs and Trade at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from Samsung Newsroom’s photostream on flickr Creative Commons.

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