South Korea’s Yoon pardons Samsung’s Jay Y. Lee to counter ‘economic crisis’

  • Samsung heir served 18 months in jail for bribery
  • Businessmen were convicted in scandal that brought down a president
  • South Korea says leaders needed to help overcome economic crisis
  • Samsung may increase investment with Lee pardoned: analysts

SEOUL, Aug 12 (Reuters) – South Korean President Yoon Suk-yeol pardoned Samsung Electronics (005930.KS) Vice President Jay Y. Lee on Friday, and the Justice Department said the business leader was needed to help overcome a “national economic crisis.”

The pardon is largely symbolic, with Lee already on parole after spending 18 months in jail for bribery in a scandal that sparked mass protests and ousted then-President Park Geun-hye in 2017.

However, analysts said the pardon should mean Lee will be able to conduct business with fewer legal restrictions and could herald big investments from Samsung, the world’s biggest smartphone and memory chip maker.

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

Technology- and export-reliant South Korea, Asia’s fourth-largest economy, is grappling with runaway inflation, weakened demand, unfavorable sentiment and slowing spending. read more

Lee, heir to the founding family of Samsung, welcomed the decision, vowing to work hard for the national economy “with continued investment and job creation.”

He was also pardoned by Yoon, Lotte Group chairman Shin Dong-bin, who was sentenced to two and a half years in prison on bribery charges, also related to Park.

In a statement, Lotte said Shin would also help “overcome the complex global crisis.”

POLITICAL CRIMES

Park herself was pardoned late last year by her successor, liberal President Moon Jae-in, who struggled to deliver on campaign promises to clean up business and politics.

A poll last month taken jointly by four pollsters showed that 77% of respondents were in favor of pardoning the Samsung leader, despite earlier protests.

“(That support) is apparently due to the current economic situation, but people also seem to have partly thought that Lee was in a position where he couldn’t ignore the pressure from the previous administration,” said Eom Kyeong-young, a Seoul-based political commentator.

While business groups such as the Korea Chamber of Commerce and Industry and the Korea Business Federation welcomed Lee’s pardon, civil rights groups criticized Yoon’s pardons for businessmen.

“Yoon Suk-yeol’s administration…ultimately only targets a country for the rich only,” People’s Solidarity for Participatory Democracy said in a statement.

Another jailed former president, Lee Myung-bak, was expected to be pardoned after Yoon raised the possibility in June, but was ultimately not on the list. He was arrested in 2018 and sentenced to 17 years in prison for corruption, embezzlement and bribery.

BACK IN BUSINESS

Analysts have long awaited decisions on major projects and investments once Lee is reinstated, 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 research firm Leaders Index.

“And projects that Samsung was pursuing, such as large mergers and acquisitions or investments, could be linked to the pardon.”

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

He has also visited Europe in June to meet with ASML Holding NV (ASML.AS) CEO Peter Wennink, discussing key team adoption of high-end chips. read more

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

Samsung’s top executives have hinted earlier this year at possible upcoming acquisition activity. Samsung Electronics hasn’t done a high-profile deal since completing its $8 billion purchase of audio electronics maker Harman in 2017.

While macroeconomic factors such as a drop in demand can influence 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 won a year earlier.

While experts say Lee may now be able to participate more freely in the administration, his legal troubles remain because of an ongoing trial in which he faces the risk of going back to jail if convicted on charges of fraud and stock manipulation.

Shares of Samsung Electronics closed 0.5% higher against the benchmark KOSPI index. (.KS11) 0.2% increase. lotte corporation (004990.KS) shares fell 0.6%.

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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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