lifesupportandthatwhenhediesthe
familywillpayallthetaxesit owes.
SouthKorea’slevyof50%onestates
ofmorethan$2.5 millionis thesecond-
highestintheOrganizationforEconomic
CooperationandDevelopment,after
Japan.(In the U.S.the rateis40%,
butitkicksinonlyabove
$22million.)TheSamsung
empireincludes 62 compa-
niesvaluedatmorethan
$300billion.AlthoughLee
ownslargechunksofsome
ofthebusinesses—including
4.2% of Samsung Elec-
tronics—they’re not big
enoughtogivehimcontrol
oftheconglomerate.The
familydependsoninformal
tiestoexecutiveswhorun52
THELIVESOFTHERICHAND
famousarenewsfodderevery-
where.ButinSouthKoreait’s
anexpecteddeaththathasthe
countryenthralled.Thecoun-
try’s wealthiest person, the
77-year-old chairman of tech
giantSamsungElectronicsCo.,
hasbeenincapacitatedsincea
2014 heartattack,andthelocal
pressfrequentlyspeculatesabout
his health: “He’s Breathing,”
“DeathRumor,”“WhoHasthe
Details?”Incourttwoyearsago
hissonsaid,“Whenthechairmanwas
alive,”thencorrectedhimself:“When
thechairmanwashealthy.”
Thereasonfortheobsession?When
LeeKun-heedies,hisheirswillface
anestatetaxofalmost$7billion,and
payingit maycomplicatethefamily’s
controloftheSamsungcon-
glomerate.Lee’snetworth
is about $15 billion, ac-
cordingtotheBloomberg
BillionairesIndex,andhis
beneficiarieswouldlikely
have to sell some ofthe
inheritance to cover the
tax—dilutingtheirstakein
Samsung. The company
dismissed rumors about
thechairman,sayinghe’sin
stableconditionandnotonThechairmanofSamsungisincapacitated,and
hisfamilyriskslosingcontrolofanempire$7b
A DEATH WATCH
IN SEOUL
The likely tax bill for the Lee
family’s inheritanceBloomberg Businessweek
WHERE THE MONEY IS
May 27, 2019BLOOMBERG(2)Lee Kun-hee in 2014Jay Y. Lee in 2017related companies, and a lot of that soft
power may dissipate with Lee’s death.
“The family is dragging their feet over
what to do with his wealth and shares,”
says Chung Sun-sup, chief executive offi-
cer of business researcher Chaebul.com.
Lee’s son, Jay Y. Lee, is one of four
vice chairmen at Samsung Electronics,
but so far he lacks the stature his father
earned over decades at the top table in
Korean business. There’s no official cor-
porate entity linking all the companies;
they’re connected by a web of cross-
shareholdings that Lee Kun-hee was
masterful at using to keep a grip on the
entire group.
Critics say the Lees have overstepped
in their efforts to maintain influence.
In 2009, Lee Kun-hee was found guilty
of transferring money to his children
through illegal bond sales. And
Elliott Management Corp. sued
the Korean government for
backing a 2015 merger between
two affiliates that increased
family control over Samsung
Electronics. A lower court ruling
in a related case landed Jay Y. Lee
in prison for a year. While he’s
denied wrong doing and is ap-
pealing the decision, the family
remains controversial in Korea.
“It’s just deeply rooted greed,”
says Lee Sang-gyu, a leader of
the pro-labor Minjung Party, who
recently led dozens of protesters to a
Samsung office carrying banners saying,
“Accounting Fraud Criminal” and “Lock
Up Jay Y. Lee” and an effigy of the execu-
tive behind bars.
The benefits of Korea’s miracu-
lous growth in the second half of the
20th century went disproportionately
to the chaebol, large family-run con-
glomerates, an issue inheritance taxes
are meant to redress. But the Samsung
case is about merit as well as money,
says Ahn Chang-nam, a tax profes-
sor at Kangnam University. “Would
it be fair if Jay Y. Lee started from
99 meters in a 100-meter race when
you’re starting from zero?” Ahn asks.
“Management should be left to profes-
sional managers.” —Min Jeong Lee
and Sam Kim