"Lee Kun-hee's 21% Stake in Samsung Life Worth Only 4-5 Trillion Won"
Controversy Over 10 Trillion Won Inheritance Tax Called "Typical Unearned Income"
[Asia Economy Reporter Wondara] Park Yong-jin, a member of the Democratic Party of Korea, commented on the succession prospects of Samsung Electronics Vice Chairman Lee Jae-yong following the passing of Samsung Chairman Lee Kun-hee, saying it will be "a close call (due to inheritance tax)." The inheritance tax that Vice Chairman Lee is expected to pay is estimated to be around 10 trillion won, and even with the disposal of Samsung Life Insurance shares, it is believed to be difficult to manage.
On the morning of the 26th, Park appeared on CBS Radio and responded to the question, "Is the succession process fully completed?" by saying, "If I were Vice Chairman Lee Jae-yong, I would still feel it’s a bit of a close call."
Park explained, "The core of Samsung Group’s management is who controls Samsung Electronics and to what extent. The family holds about 5-6%, and including special relations, about 15-18%, so it’s basically done. But since the father passed away, it’s difficult because of the inheritance tax," adding, "We need to watch how they proceed without affecting the management rights."
When asked, "Many say that Samsung Life Insurance shares will be sold to pay the inheritance tax. Do you see it that way?" Park said, "Even the 21% stake in Samsung Life Insurance held by Chairman Lee Kun-hee is only worth about 4 to 5 trillion won," and added, "It won’t be easy to cover the Samsung Electronics shares and the remaining inheritance tax with that." He also noted, "Samsung Life Insurance holds 8% of Samsung Electronics shares. That is not Vice Chairman Lee Jae-yong’s money," and explained, "It is money from Samsung Life Insurance’s policyholders and shareholders, so even if sold, it doesn’t become his personal asset."
Park also made remarks suggesting that the estimated 10 trillion won inheritance tax on Samsung Group should be increased. He said, "The public might think, ‘Why so much? 10 trillion won?’ but this is a typical case of unearned income," emphasizing, "During President Park Chung-hee’s era, it was over 70%. It was even higher during President Syngman Rhee’s time." Regarding social redistribution, he said, "It probably won’t happen," and added, "These public interest foundations have been exploited to strengthen management succession or control, which has made people very angry. A new social consensus needs to be established."
Park also pointed out the issue of Samsung Life Insurance’s ownership of Samsung Electronics shares. In June, he proposed an amendment to the Insurance Business Act to calculate insurance companies’ asset ratios based on the ‘current market price’ rather than the ‘acquisition price’ of stocks. He explained, "Samsung Life Insurance holds the largest controlling stake in Samsung Electronics," and said, "Samsung Life Insurance holding Samsung Electronics shares violates our country’s Insurance Business Act."
He continued, "During the authoritarian era, this was overlooked, but now it’s no longer acceptable. It doesn’t align with the Financial Group Supervision Act our government is promoting. This issue must be resolved, but how to create a resolution point is the question," and added, "I expect Vice Chairman Lee Jae-yong, as Samsung’s new leader, to propose appropriate social agreements that reflect the changed public common sense and expectations in this regard."
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