Vulture Man
JAY LEE HAD A conundrum. He was inching closer to the throne, but
challenges continued to stand in his way. He and his two sisters were facing
a combined inheritance tax that could reach $6 billion, a stratospheric
amount. If he was unable to pay it, he could be forced to sell some of his
Samsung stakes. It could block his effort to become Samsung’s next
chairman.
“To put that in perspective,” Reuters reported, “the United States
expects to collect just $16 billion this year in estate and gift taxes—a levy
that has long been a political bone of contention and which many rich
Americans go to great lengths to minimize.”
For almost twenty years, starting with the scandalous share sale in 1996,
his father Chairman Lee’s lieutenants had been preparing for moments like
this. Some had been criminally convicted because of their efforts, a
bewildering labyrinth of buyouts and sales from one Samsung affiliate to
another with the aim of raising the needed cash for the inheritance tax—
among the highest in the world at 50 percent in the highest tax bracket—
and passing control of Samsung to Jay Lee.
They stayed mere steps ahead of the South Korean government, which
had moved to sew up its financial regulations shortly after the failed share
sale twenty years earlier. By early 2015, chatter was flying in coffee shops
and investment funds that another such financial chess move was imminent.
“Is it possible?” a minority shareholder asked me at a coffee shop in
Yeouido, Seoul’s financial district. He was nervous that he might lose
money if Samsung ignored its shareholders to elevate its crown prince.
“With Samsung, anything’s possible,” I said.
“Is the chairman dead?” he asked me.