Lee Jae-yong, One Day Before Retrial Verdict... Will the Compliance Committee Be the Final Variable?

Prison Sentence or Suspended Sentence Decision
Samsung Establishes Compliance Committee by Court Order... Vice Chairman Lee's Apology Secured
'Voluntary Bribery' vs 'Forced Bribery'... Court Expected to Define Bribery Nature
Business Community Concerned About Economic Impact if Vice Chairman Lee Is Detained

[Image source=Yonhap News]

[Asia Economy Reporter Ki-min Lee] Samsung Electronics Vice Chairman Lee Jae-yong is about to face sentencing in the retrial related to bribery charges in the state affairs manipulation case. The court's evaluation of the Samsung Compliance Committee is expected to be the final variable determining Lee's sentencing.

According to business and legal circles on the 17th, the Seoul High Court Criminal Division 1 (Presiding Judges Jung Jun-young, Song Young-seung, Kang Sang-wook) will hold the sentencing hearing for Lee's bribery and other charges retrial at 2:05 p.m. on the 18th. The prosecution requested a 9-year prison sentence for Lee at the previous closing argument hearing.

Lee was arrested and indicted in February 2017 on charges of offering bribes to former President Park Geun-hye and Choi Seo-won (formerly Choi Soon-sil) to assist with Samsung Group's management succession. The first trial recognized 8.9 billion KRW as bribery, including 7.2 billion KRW for equestrian support for Choi's daughter Jung Yoo-ra and 1.6 billion KRW for sponsoring the Korea Winter Sports Gifted Center, sentencing Lee to five years in prison. However, the second trial recognized only 3.6 billion KRW as bribery and sentenced him to two years and six months in prison with a four-year probation. The Supreme Court's full bench overturned the appellate court's acquittal of 3.4 billion KRW for horse purchases for Jung and 1.6 billion KRW for sponsorship of the Winter Sports Gifted Center, ruling in August 2019 that these should be considered bribes and remanded the case.

Since the amounts recognized as bribery differ among the first trial, second trial, and Supreme Court, the prosecution and Lee's defense have been engaged in legal disputes over sentencing in the retrial.

The biggest issue is the effective operation and sustainability of the Compliance Committee established by the court's order. At the first hearing of the retrial, the court instructed Lee to establish a monitoring body for Samsung's compliance management, referencing Chapter 8 of the U.S. Federal Sentencing Guidelines and the effective monitoring systems implemented by major U.S. corporations. Chapter 8 of the U.S. Federal Sentencing Guidelines reduces sentences for companies with substantial compliance programs.

Accordingly, Samsung established and has been operating the Compliance Committee since early last year, chaired by former Supreme Court Justice Kim Ji-hyung. Since early last year, the Compliance Committee has recommended that Lee express opinions on succession, labor, and civil society communication, and Lee made a public apology in May last year addressing these issues.

During the expert review process of the Compliance Committee, conducted under the court's initiative, the prosecution and Lee's defense had differing opinions on the effectiveness and sustainability of the committee. However, former Constitutional Court Justice Kang Il-won, recommended by the court, gave a generally positive evaluation. Based on the expert review results, the Compliance Committee plans to further subdivide compliance risks that may arise at Samsung this year and regularly meet with top executives, including Lee, to emphasize compliance management.

The nature of the horse purchase expenses and sponsorship of the Winter Sports Foundation provided by Lee is also a point of contention. The prosecution claims the horse purchase expenses for Jung and sponsorship of the Winter Sports Gifted Center were 'voluntary bribes,' while Lee's defense argues they were 'bribes coerced by former President Park.'

Business Community Concerned About Economic Impact if Vice Chairman Lee is Imprisoned

The business community is concerned about the potential impact on the Korean economy if Vice Chairman Lee is sentenced to prison and detained.

Park Yong-man, Chairman of the Korea Chamber of Commerce and Industry, submitted a petition to the Seoul High Court on the 15th regarding Lee. This is the first time in his seven years and eight months as chairman that Park has submitted a petition in a businessperson's trial. Park explained, "Having observed Vice Chairman Lee and considering the weight Samsung holds in society, I submitted the petition hoping that he would be given a chance."

Kim Moon-gi, Chairman of the Korea Federation of SMEs, also issued a statement on the 17th expressing hope for leniency from the judiciary toward Lee. Kim said, "While the wrongful aspects of the state affairs manipulation case must be corrected, considering Samsung's role and weight in our economy, Lee should be given sufficient opportunity to exercise ownership to overcome the current COVID-19 crisis and lead our country's economic ecosystem."

Earlier, on the 7th, Ahn Geon-jun, Chairman of the Korea Venture Business Association, also submitted a petition emphasizing the need for Lee's role in fostering a symbiotic ecosystem between venture companies and large corporations.