Former Samsung chairman Lee Kun-hee, convicted for tax evasion, returns to post

By Kelly Olsen, AP
Tuesday, March 23, 2010

Former Samsung chairman Lee returns to post

SEOUL, South Korea — Lee Kun-hee, the former chairman of Samsung Electronics who was convicted of tax evasion and later pardoned by South Korea’s president, has returned to lead the company after a nearly two-year absence, Samsung announced Wednesday.

The 68-year-old Lee is a South Korean corporate icon and credited with turning the company into a major force in the global electronics industry. He was indicted on charges including tax evasion in April 2008 and resigned from his post before being convicted, fined and handed a suspended three-year prison sentence.

There had been widespread speculation in South Korea that Lee would return to the company after he received a special presidential pardon late last year. The amnesty was given to allow the billionaire business magnate to rejoin South Korea’s efforts to host the Winter Olympics after the country failed twice to bring them to PyeongChang, a mountain resort east of Seoul.

Lee is a member of the International Olympic Committee.

The decision to call Lee back to the boardroom came at a meeting Wednesday of a committee of presidents of various Samsung businesses, said company spokesman James Chung.

Lee, said last year by Forbes Asia to be South Korea’s richest person, is the son of the founder of the Samsung Group conglomerate, which consists of dozens of companies with interests in areas as diverse as shipbuilding, construction, fashion, leisure and finance. Samsung Electronics is the group’s flagship company.

“It is a true crisis now,” Lee said in a statement, apparently referring to challenges facing companies including his own. “Top rank global corporations are collapsing. That could happen sometime and somehow even to Samsung.”

Such a scenario is certainly not imminent. Lee’s return comes after a record year for sales in 2009. Samsung said Monday it expects double-digit percentage growth in sales this year as the global economy continues to recover.

Samsung recorded record revenue of 136.29 trillion won, or $119.72 billion at current exchange rates, last year on a consolidated basis — which includes the performance of its overseas and domestic subsidiaries excluding financial businesses.

Over the past decade Samsung has become one of the world’s top technology companies in both consumer electronics and some of the key components that make them operate.

The Suwon, South Korea-based corporation is the world’s largest manufacturer of flat screen televisions and the biggest producer of computer memory chips and liquid crystal displays. It ranks second behind Finland’s Nokia Corp. in mobile phones.

Lee has long been considered the driving force behind the company’s rise through his focus on improving quality. But persistent questions about Samsung’s corporate governance and its influence in South Korea have long cast a shadow over its success.

Presidential pardons for convicted tycoons are common in South Korea. The country has struggled with a legacy of corporate corruption beginning under military-backed governments in the 1960s that helped spearhead its rise from one of world’s poorest countries to an industrial powerhouse.

Hyundai Motor Co. Chairman Chung Mong-koo received a presidential pardon in 2008 after a conviction for embezzlement. Two other prominent business leaders received pardons at the same time.

Critics have said judges in South Korea are too tolerant of crimes committed by heads of industrial conglomerates, known as chaebol.

Shares in Samsung Electronics rose 1.2 percent to 819,000 won in early afternoon trading. The company’s stock price soared 77 percent last year.

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