Lee Jae-yong's 'State Affairs Manipulation' Retrial Verdict Today... Compliance Committee Decides Fate

Lee Jae-yong, Vice Chairman of Samsung Electronics [Photo by Yonhap News]

[Asia Economy reporters Seongpil Cho and Gimin Lee] The sentencing trial for Samsung Electronics Vice Chairman Lee Jae-yong on charges of bribery related to the state affairs manipulation scandal will be held on the 18th. The court's evaluation of the Samsung Compliance Committee is expected to be the final variable determining Lee's sentencing.

The Seoul High Court Criminal Division 1 (Presiding Judge Jeong Jun-young, Judges Song Young-seung and Kang Sang-wook) will conduct the sentencing trial at 2:05 p.m. on the same day for Lee, who was indicted on charges including bribery. The prosecution requested a 9-year prison sentence for Lee at the previous closing argument.

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 the succession of Samsung Group's management rights. 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 5 years in prison. However, the second trial recognized only 3.6 billion KRW as bribery and sentenced him to 2 years and 6 months in prison with a 4-year probation.

The Supreme Court's full bench overturned and remanded the case in August 2019, ruling that the 3.4 billion KRW for horse purchases for Jung Yoo-ra and the 1.6 billion KRW sponsorship for the Winter Sports Gifted Center, which the appellate court had acquitted, should be considered bribery. Since the amounts recognized as bribery differ among the first trial, second trial, and Supreme Court, the prosecution and Lee's defense have been disputing the sentencing in the retrial.

The key 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 communication with civil society, and Lee made a public apology in May last year addressing these issues. During the expert hearing procedure conducted under the court's initiative, the prosecution and Lee's side had differing opinions on the effectiveness and sustainability of the Compliance Committee. However, former Constitutional Court Justice Kang Il-won, recommended by the court, gave a generally positive evaluation.

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