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Samsung’s Lee Gets Pardon to Help Ramp Up Korean Economy

Samsung vice-chairman Jay Y Lee and another top businessman won pardons on Friday from President Yoon Suk-yeol, who wants them to help rev up the South Korean economy.


Experts have warned there could be far-reaching impacts, such as a surge in prices, if Washington limits shipments of US chipmaking equipment to memory chip producers in China.
South Korean President Yoon Suk-yeol and Samsung Electronics vice chairman Lee Jae-yong, left, stand next to US President Joe Biden during a visit to Samsung Electronics' Pyeongtaek campus in May 2022. The company has put billions in a plant in China that would be hit hard by a ban that the US is considering but Samsung is also planning a big plant in Texas. File photo: Jonathan Ernst, Reuters.

 

Samsung Electronics vice-chairman Jay Y Lee and another prominent businessman were granted pardons on Friday by South Korean President Yoon Suk-yeol.

Justice Ministry officials said the moves were needed so that Lee and Lotte Group chairman Shin Dong-bin – both convicted of bribery – can help the country overcome a “national economic crisis”.

The pardon for the Samsung boss is symbolic given that Lee is already out on parole after serving 18 months in jail for an offence committed when he led the world’s biggest smartphone and memory-chip maker.

However, it should mean Lee will be able to carry out business activities more freely and could herald some big investments from Samsung, analysts said.

“With urgent needs to overcome the national economic crisis, we carefully selected economic leaders who lead the national growth engine through active technology investment and job creation to be pardoned,” Justice Minister Han Dong Hoon told a briefing.

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

“I will contribute to the economy with continuous investment and job creation and give back the people and government’s regards,” Samsung said in a statement, citing Lee.

 

ALSO SEE: Samsung Electronics Profit Rises 12% on Strong Chip Demand

 

 

Major Moves Tipped

Also pardoned by pro-business President Yoon was Lotte Group chairman Shin Dong-bin, who was sentenced to a two-and-a-half-year prison sentence on charges of bribery.

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

Tech- and export-dependent South Korea is grappling with soaring inflation and signs that Asia’s fourth-largest economy is struggling with weakening demand, poor sentiment and slowing spending.

Analysts have long expected decisions on major M&A projects and investments once Lee was reinstated, with company sources saying such decisions should only be made by Lee.

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

“And projects that were being pursued by Samsung, such as major M&A or investments, these could be tied to the pardon. There’s a high chance that announcements will be made going forward.”

 

Biden Visit

Even before receiving the presidential pardon, Lee had returned to the limelight, appearing in May with President Yoon and US President Joe Biden when they visited Samsung’s Pyeongtaek chip production facilities.

He has also visited Europe in June to meet ASML Holding CEO Peter Wennink to discuss the adoption of key high-end chip equipment.

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

While experts say Lee could now more freely participate in management, his legal risks still persist due to an ongoing trial where he faces charges of fraud and stock manipulation.

“With his trial, Lee could face a fresh jail term if convicted. However, the presidential pardon gives him some flexibility to handle big management issues for now,” said Lee Kyungmook, a professor at Seoul National University’s Graduate School of Business.

Top Samsung executives have hinted earlier this year at potential upcoming acquisition activity. Samsung Electronics has not conducted a high-profile deal since it completed its purchase of audio electronics maker Harman for $8 billion in 2017.

Although macroeconomic factors such as a demand downturn may weigh on investment decisions, Samsung has a huge war chest.

Samsung Electronics’ cash balance increased slightly to 125 trillion won (over $95 billion) as of end-June, from 111 trillion a year earlier.

Shares in Samsung Electronics were trading up 1% versus benchmark KOSPI’s 0.1% rise. Lotte Corp shares were down 0.8%.

 

  • Reuters with additional editing by Jim Pollard

 

 

ALSO SEE:

 

 

New US Chip Curbs on China Would Risk More Supply Chain Woes

 

US Set to Limit Export of Chipmaking Gear to China Firms

 

Samsung’s Controlling Family Sells $1.1bn in Shares to Pay Tax Bill

 

 

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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