Samsung hierarchy hit by yet another scandal

Samsung is facing yet another scandal after chairman Lee Kun-hee was named as a suspect in a $7.5 million tax evasion case in South Korea. The investigation into Kun-hee relates back to the late payment of 130 billion won in tax in 2011, though only 8.2 billion of that sum falls within the statute of limitations, according to police.

Kun-hee is yet to be questioned due to his ‘physical condition’ according to a police spokesperson. Following a heart attack in 2014 Kun-hee has remained hospitalized in Seoul’s Samsung Medical Centre and has difficulty communicating with having shown little sign of recovery. “Samsung chairman Lee Kun-hee and a Samsung executive managed funds in 260 bank accounts under names of 72 executives, suspected of evading taxes worth 8.2 billion won,” Korean National Police Agency said in a statement.

It is the latest in a string of scandals that have hit the Samsung family over the last few years. The chairman’s son Jay Y Lee was released from prison earlier this week after an appeals court halved his sentence for bribery and corruption to 2 and a half years and then suspended in for four years. Jay Y Lee had been acting as the head of the group until his arrest, following his father’s heart attack.

Lee was convicted of bribing former president Park Geun-hye to strengthen his control over Samsung. The conviction is part of a wider corruption investigation into Park, who herself faces conviction before the end of the year. Lee was found guilty of approving donations to Park’s friend, Choi Soon-sil, in return for securing government support for the contentious merger of two Samsung affiliates that would strengthen his control over the group. Since his arrest in February, Lee has insisted the payments were made to Samsung without his knowledge, and with no expectation of favours from the Park administration. In total Lee was found guilty of sanctioning £30 million in bribes to four entities controlled by Choi.

Following Jay Y Lee’s arrest, Samsung CEO CEO Kwon Oh-hyun stood down from his post when all expected him to assume control at the head of the company. Citing a ‘crisis’ within the tech company, Oh-hyun’s resignation surprised many. Yet despite the scandals in the boardroom, Samsung’s profits have continued to soar. 

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