South Korea’s 50 Richest
Samsung Under
a Spotlight
F
or the mighty Samsung empire,
things couldn’t be worse... or
better. The venerable Lee Kun-
Hee, the richest Korean by far, has
been hospitalized for three years. His
only son, Jay Y. Lee, 48, who had been
running the group, is in jail facing
bribery and embezzlement charges (he
denies all wrongdoing). But led by its
seemingly unstoppable flagship, Sam-
sung Electronics, the group is riding
high. With an estimated first-quarter
operating profit of $8.7 billion, up
48% from a year earlier, Samsung
Electronics shares have gained 60%
over the past year. Last month Sam-
sung introduced the Galaxy S8—an
answer to the embarrassing failure of
the fire-prone Note7 last year.
While a battery of lawyers fought
to defend Jay Y. in a packed Seoul
courtroom, Koh Dong-Jin, Samsung
Electronics’ president of mobile com-
munications, heralded the wonders ofthe S8 before equally packed gatherings
in New York and Seoul: “The Samsung
Galaxy S8 and S8+... are our testament
to regaining your trust.” He did not need
to mention the fiasco of the Note7, but
the message was clear.
Did it matter that the Korean media
regularly showed Jay Y., the Samsung
Electronics vice chairman, with his
wrists bound in ropes like a common
criminal? Were investors concerned that
both father and son, their caricatures on
signs held aloft during marches, were
the target of demonstrators calling for
reform of the chaebols?
In the confines of his cell, Lee (No. 3)
can see his lawyers but otherwise is
allowed only three ten-minute conver-
sations a day with visitors through a
grated window, all monitored by prison
guards. The judge granted the prosecu-
tor’s request to keep him behind bars
during the trial on the grounds that he
might “destroy the evidence.”For Samsung the evidence that
counts is the value of the group’s 60
companies, which is roughly equivalent
to 25% of South Korea’s $1.4 tril-
lion gross domestic product. During
a tumultuous transition, that value is
holding up quite well, even without the
presence of the chairman and vice
chairman.BY DONALD KIRK