The Tech Titan Who Led His Company From a 68-Square-Foot Jail Cell

Samsung Electronics chairman Lee Jae-yong (R) leaves after receiving his verdict on the controversial 2015 merger case, at the Seoul Central District Court in Seoul on February 5, 2024. (Photo by Jung Yeon-je / AFP) (AFP)
Samsung Electronics chairman Lee Jae-yong (R) leaves after receiving his verdict on the controversial 2015 merger case, at the Seoul Central District Court in Seoul on February 5, 2024. (Photo by Jung Yeon-je / AFP) (AFP)

Summary

The richest man South Korea is free of pressing legal problems for the first time in a decade. What’s next for Samsung?

SEOUL—The executive chairman of Samsung Electronics, Lee Jae-yong, has been convicted of bribing a former South Korean president. He was charged with stock-price manipulation and accounting fraud for a past merger of two Samsung affiliates. And he was charged with unlawfully using the sedative propofol. For the bribery conviction, he spent roughly 560 days behind bars in two separate stints during the past decade. He continued to lead the electronics titan during this time.

Now, in a rare break for Samsung’s leader, he isn’t facing any criminal charges.

Lee, 55 years old, is the wealthiest person in South Korea and a celebrity. Local media closely follow his every move. A padded vest he was photographed in at the airport—made by a Samsung-owned fashion brand Beanpole—quickly sold out online. Locals have taken note of his choice of eyeglasses (the Austrian brand Silhouette) and flocked to buy the lip balm that Lee was seen applying during a televised parliamentary hearing (the American brand Softlips). More recently, his daughter’s summer-internship plans at a Chicago-based NGO became national news.

A Seoul court this month acquitted him of the last outstanding charges of stock manipulation and accounting fraud. Prosecutors have appealed, but even if the higher court were to reach an alternate ruling, the chances of his landing back in prison are low, legal experts say. Lee has said he is innocent of all finance charges and was pardoned for the bribery conviction in 2022. He paid a fine to settle the drug charges in 2021.

A Samsung Electronics spokeswoman declined to comment or make Lee available for an interview for this article.

When his father, a legendarily hard-charging leader of Samsung, fell ill in 2014, Lee seemed poised to elevate Samsung to new heights. He had been groomed from an early age to lead South Korea’s largest business conglomerate and its crown jewel, Samsung Electronics, the world’s largest maker of memory chips and a dominant player in smartphones and TVs. He studied business administration at Harvard, is fluent in English and Japanese, and favors a Westernized name abroad: “Jay Y."

Executive visits in jail

Instead, senior Samsung executives were his regular visitors at the Seoul Detention Center, where Lee was serving time for his bribery conviction in a cell measuring 68 square feet, which is roughly half the size of a standard U.S. parking space. He had a foldable mattress, table, chair, sink, toilet and television (it was made by Samsung’s rival LG). After his jail time ended, Lee continued to be tied down by legal woes. Over the last roughly 3 ½ years, Lee has had weekly court appearances while on trial for charges linked to the 2015 merger of two Samsung affiliates.

Samsung’s different businesses are run by CEOs and senior managers, but Lee is the top boss who sets the firm’s strategy and approves major decisions.

Now that Lee can focus on the business full-time, Samsung Electronics, where Lee dedicates most of his time, just posted its worst annual earnings in a decade amid a slump in its mainstay memory-chip business and a reordering of the semiconductor industry. Apple just leapfrogged Samsung as the No. 1 smartphone maker by shipments. SK Hynix has raced ahead in partnering with Nvidia with specialized memory chips that power artificial-intelligence systems. Taiwan Semiconductor Manufacturing Co.has extended its lead in the contract chip-making business. Samsung hasn’t made a major acquisition in seven years.

Days after his recent acquittal, Lee visited a Samsung SDI battery factory in Malaysia. He implored employees not to dwell on short-term performance. He called for bold investments and change.

“We must not be intimidated by difficulties," he said.

Lee’s assumption of power atop Samsung was never in question. His unrivaled appointment to head Samsung—his two sisters head Samsung affiliates—is a vestige of South Korea’s decades-old, family-run conglomerates, or chaebols, where family succession is the norm. As the country climbed out of postwar poverty, the government maintained close ties with a handful of mega-firms, such as Samsung, allocating capital and quieting labor unrest.

The lines between government and business have often blurred. Many of the chaebol heads of the past have been convicted of white-collar crimes involving political leaders. With few exceptions, the business tycoons got exonerated with presidential pardons intended to spur the economy—and in the case of Lee’s father, Lee Kun-hee, to help South Korea land the 2018 Winter Olympics. Lee Jae-yong’s pardon factored in the nation’s economic situation and followed lobbying by business groups that warned his absence might result in the country losing its top status in semiconductors and other key businesses.

South Korean corporate-governance experts, foreign investors and local civic groups have often criticized the leniency shown to chaebol heads—as they did again after Lee Jae-yong’s recent acquittal.

“This is an unprecedented ‘let Samsung off the hook’ ruling," according to Solidarity for Economic Reform, a South Korean civic group, which argued the decision distorted basic facts to win Lee and Samsung’s innocence.

The Republic of Samsung

South Korea has been called the Republic of Samsung. It has dozens of affiliates spanning theme parks to biopharmaceuticals to credit cards. A South Korean can be born in a Samsung hospital and be laid to rest at a Samsung funeral home. Samsung Electronics alone represents about one-fifth of the country’s benchmark Kospi index.

Lee’s legal travails haven’t largely hurt his or his firm’s local standing. More than three-quarters of South Koreans backed his pardon in 2022.

Lee married Lim Se-ryung, an heiress of Daesang Group, one of South Korea’s large food-business conglomerates, in 1998. They have a son and a daughter who were born in the U.S. and have dual citizenship in the U.S. and South Korea. The couple divorced in 2009, and Lim has been publicly dating Lee Jung-jae, the lead actor in the Netflix hit “Squid Game."

Lee doesn’t receive a salary. He maintained the title of vice chairman from 2012 until 2022, and became executive chairman in October 2022.

“I know there are concerns, criticism, worries and big expectations for me. I will do my best," Lee had told reporters in 2021, as he left the Seoul Detention Center after getting paroled for the bribery charge.

While scheduling around his court dates, Lee made more than a dozen trips in recent years, including a state visit in December to the Netherlands with South Korean President Yoon Suk Yeol to discuss semiconductors. He has also visited various Samsung affiliates in South Korea and elsewhere and delivered short, motivational messages to employees.

In February of last year, Lee visited Samsung’s display-making facilities in the South Korean city of Asan and called on the firm to “innovate continuously and invest pre-emptively to develop capabilities that no one can surpass."

Since leaving jail, Lee has also traveled abroad for, or hosted in Seoul, some of Samsung’s key business partners, including Google Chief Executive Sundar Pichai, Microsoft’s Satya Nadella and SoftBank founder Masayoshi Son.

His style stands in contrast with the forceful direction of his late father, who died in 2020. Under Lee Kun-hee, Samsung became a dominant memory-chip manufacturer and evolved from a copycat electronics maker into Apple’s chief smartphone rival. He once famously assembled top Samsung officials, burned a pile of the company’s mobile phones in disgust and issued a famous directive: “Change everything except your wife and children."

Lee is now expected to become more active in pushing for major investments or structural changes to show what he can do without legal issues holding him down, said Mike Cho, a corporate-governance expert and professor at Korea University in Seoul.

“A lot of people want him to act like a big tech leader, who is really active and proactive. He knows that, so I think he will act more like that in the future," Cho said.

Write to Jiyoung Sohn at jiyoung.sohn@wsj.com

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
more

MINT SPECIALS

Switch to the Mint app for fast and personalized news - Get App