Prison Sought for Samsung Leader Prosecutors Seek 12-Year Sentence -- WSJ

By Eun-Young Jeong Features Dow Jones Newswires

South Korean court to rule on Aug. 25 after a lengthy corruption trial involving Samsung heir

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This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 8, 2017).

South Korean prosecutors sought a 12-year sentence Monday for Lee Jae-yong, the de facto head of the Samsung conglomerate, after a monthslong trial over a national corruption scandal that has ensnared many of the country's high-profile figures, including former president Park Geun-hye.

The prosecutors' sentence recommendation marks the end of Mr. Lee's court hearing. The court will give its final ruling on Aug. 25. Mr. Lee can be detained without a ruling by law until Aug. 27.

Mr. Lee, the grandson of Samsung's founder and the vice chairman of Samsung Electronics Co., has been on trial since April. Prosecutors accuse Mr. Lee of agreeing to pay some $37 million to entities linked to a close friend of Ms. Park in exchange for the government's support to consolidate his grip over the Samsung empire. This included support for a merger between two Samsung affiliates that increased his personal stake in Samsung Electronics, the world's largest smartphone maker and the crown jewel of South Korea's largest conglomerate.

Mr. Lee, who has been detained since February as he undergoes trial, faces five charges centering around bribery. Mr. Lee has denied all charges against him.

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The prosecutors' recommended sentence goes above the minimum five-year sentence previously estimated by legal experts surveyed by The Wall Street Journal, and would make Mr. Lee the first Samsung leader to be imprisoned since the company was founded in 1938. By South Korean law, sentences of more than three years cannot be suspended. Mr. Lee would have to serve a third of his sentence term before he could win parole.

Ms. Park was removed from office in March by the country's Constitutional Court following her impeachment over accusations that she colluded with her confidante, Choi Soon-sil, to extort money from Samsung and other South Korean conglomerates.

Also on Monday, prosecutors recommended 10-year prison sentences for three other former Samsung officials involved in the same case as Mr. Lee, including the onetime head of the Samsung conglomerate's corporate strategy office, the group's former control tower that was abolished in February. Prosecutors sought a seven-year sentence for one other former Samsung official.

Mr. Lee isn't the first Samsung head to be embroiled in legal issues. Mr. Lee's father, Samsung chairman Lee Kun-hee, was convicted twice: In 1995 for bribing the then-president, and in 2008 for embezzlement and tax evasion. The elder Mr. Lee said at the time that the payments were customary, not bribes, and pleaded not guilty in the latter. He was given suspended sentences and later pardoned in both cases, and never served prison time.

In recent years, the heads of South Korea's large, family-run conglomerates haven't let a prison sentence get in the way of running their businesses. Chey Tae-won, the second-generation head of the SK Group, the country's third-largest conglomerate, did so before he was pardoned by the president in 2015.

Under South Korean law, Mr. Lee isn't required to relinquish his board seat at Samsung Electronics, even if convicted. However, experts say he may face pressure from shareholders to step down if he is found guilty of embezzling company funds, one of the five charges put against him by prosecutors. Mr. Lee was nominated to the company's board of directors last October.

Separately on Monday, South Korean police raided a management office for Samsung's family-owned residences in Seoul as part of an investigation into allegations of fund misappropriation and tax evasion related to interior renovations that took place between 2008 and 2015. Samsung declined to comment on Monday's raid. In June, Samsung issued a statement denying similar allegations raised by local media over property owned by its chairman.

Write to Eun-Young Jeong at Eun-Young.Jeong@wsj.com

(END) Dow Jones Newswires

August 08, 2017 02:47 ET (06:47 GMT)