Samsung Heir Lee Jae-yong Faces Judgment Day in Corruption Trial

By Eun-Young Jeong Features Dow Jones Newswires

A South Korean court will rule Friday on whether to convict Lee Jae-yong, the de facto head of Samsung, following his trial in a corruption case that has gripped the country and helped bring down the previous government.

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The verdict looms as a key moment for Samsung and for a country where close ties between business and government have been an integral part of its economic rise and a target of recent opprobrium.

Prosecutors have sought a 12-year sentence for Mr. Lee, who is 49 years old. If he is convicted, Samsung Electronics Co.--the world's largest smartphone maker, of which he is vice chairman--faces the prospect of a prolonged absence of leadership. Under South Korean law, sentences of more than three years can't be suspended. Mr. Lee would have to serve a third of his sentence term before he could win parole.

The closely watched trial centers on an alleged effort by Mr. Lee to bribe South Korea's then-president, Park Geun-hye.

Samsung has acknowledged it offered to pay about $38 million to entities linked to the president's close friend, Choi Soon-sil, of which about half went toward a German sports-consulting company to pay for equestrian training for Ms. Choi's daughter. Samsung has denied the payments were in return for favors.

In exchange for these financial contributions, prosecutors say, Ms. Choi colluded with Ms. Park to ensure the government would support several of Samsung's business deals, most notably in a controversial 2015 merger of two Samsung affiliates. That merger shuffled Samsung's intricate cross-shareholding structure in a way that, according to prosecutors, strengthened Mr. Lee's grip over Samsung Electronics, the conglomerate's crown jewel.

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Ms. Park has denied wrongdoing. She is facing a separate trial on 18 charges, including bribery and coercion. Ms. Choi is also facing charges in connection with the corruption scandal; she has also denied wrongdoing.

The charges against Mr. Lee include hiding assets abroad, which could land him at least 10 years in prison in the event of a guilty verdict. Any sentence would hinge on whether the court finds Mr. Lee guilty of bribing the former president.

"The bribery charge holds the key," said Yang Jae-sik, one of the prosecutors involved in the trial.

Mr. Lee has denied all charges against him and said that he wasn't aware of the payments. He testified earlier this month that he was rarely involved in decisions affecting the broader Samsung conglomerate, which spans dozens of companies.

The same court will also deliver verdicts Friday on four other former Samsung executives who have been indicted on the same charges as Mr. Lee, except for perjury. They have all denied wrongdoing.

Mr. Lee became Samsung's de facto head after his father, Lee Kun-hee, was incapacitated following a heart attack in 2014. The younger Mr. Lee has been detained since his arrest in February.

Samsung is the largest of South Korea's chaebols--the family-run conglomerates that dominate the country's economy. The chaebols are widely credited with helping to lift the nation out of poverty but in recent years have become a lightning rod for protests about their perceived favorable treatment by the judiciary and successive governments.

Ms. Park was impeached in December over her alleged role in the corruption scandal. In March, the Constitutional Court removed her from office.

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

(END) Dow Jones Newswires

August 24, 2017 08:36 ET (12:36 GMT)