Samsung boss fined £55m for tax-dodging

Ex-Samsung chairman Lee Kun-hee has been found guilty of tax evasion - but he won't be going to prison.

Last Updated: 31 Aug 2010

Lee was chairman of giant Korean conglomerate Samsung for 21 years until April, when he quit after the Korean authorities charged him with tax evasion and breach of trust. Today he’s been found guilty on the first charge (though cleared of the more serious second charge) and hit with a three year suspended prison sentence and a whopping £55m fine. Painful indeed – but as South Korea’s richest man, with an estimated $3.4bn in the bank, he can probably afford it. And given that prosecutors were trying to bang him up for seven years and slap him with a $347m fine, he might even feel he’s got off pretty lightly...

Still, it’s a bit of a shock to see such a legendary figure brought crashing to earth by his own government. The importance of Samsung to South Korea can’t be understated – it accounts for nearly one-fifth of GDP – and much of this is due to Lee, the son of the founder who realised the potential in the little-known chaebol (which started life as a dried fish exporter) and built it into a global corporate superpower. In fact, he’s so famous there that when he quit, regular programming was interrupted to allow him to deliver his resignation speech live on national TV. That’s like pausing Coronation Street so Sir Alan Sugar could tell us why he was leaving Amstrad (or maybe not).

What’s more, the big chaebols (of which Samsung is the biggest) entirely dominate Korean political and economic life, and it’s not unknown for a few corners to be cut along the way. In fact, Lee himself was convicted in the 1990s for payments made to two former presidents, until a third arrived in office and swept the whole thing under the carpet. Despite attempts to crack down on unscrupulous behaviour by these byzantine organisations, rumour has it that corruption is still widespread.

But although in some ways it’s remarkable that the authorities have pursued Lee so vigorously (allegations from a Samsung whistleblower sparked a three-month probe, which discovered that Lee had spirited away £2bn of assets - a lot of money to be hiding at the bottom of your garden) – the cynic might suggest this is pretty common practice in South Korea. Every few years, a captain of industry is hauled across the coals and given a very public (but not overly-incapacitating) slap on the wrists, thus convincing foreign investors (who get a lot more hot-under-the-collar about this sort of thing) that the authorities are serious about cracking corruption. And then when all the fuss dies down, Korean business life will continue pretty much as it always has....

In today's bulletin:

Feeling is mutual for Co-op and Somerfield
Samsung boss fined £55m for tax-dodging
Cameron's masterplan for economic salvation
Leadership Week: Sir Nicholas Young of the British Red Cross
Mormons mortified by missionary positions

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