Verdict for Samsung heir weighs on chaebol

SEOUL - The heir to the Samsung empire will face the verdict in his corruption trial on Friday, which threatens to leave the world's biggest smartphone maker rudderless for more than a decade.

Lee Jae-yong, vice-chairman of Samsung Electronics and the son of Samsung group chairman Lee Kun-hee, has been groomed all his life to take over the giant conglomerate founded by his grandfather in 1938.

It is by far the largest of the chaebols, the family-controlled firms that dominate Asia's fourth-largest economy, which some South Koreans self-mockingly dub the "Republic of Samsung".

Its turnover is equivalent to a fifth of the national GDP and it has long had close, opaque connections with political authorities.

But now prosecutors have demanded a 12-year sentence for Samsung's 49-year-old "crown prince" if he is convicted of charges including bribery and embezzlement in connection with the corruption scandal that brought down president Park Geun-hye.

Prosecutors accuse Lee of seeking state approval for a controversial 2015 merger of two Samsung units seen as a key step to ensuring his accession. He pleaded not guilty.

Park, dismissed from office in March after public fury, is on trial separately accused of offering policy favors to tycoons including Lee who enriched her secret confidante Choi Soon-sil, with Samsung handing over around $40 million.

Lee has been detained during his trial, and the prospect of his being imprisoned for years has sent shock waves through Samsung, where the founding family's rule has been taken for granted for decades.

The Lee clan directly owns about five percent of Samsung Electronics shares, but maintains its grip on the wider group through a byzantine web of cross-ownership stakes involving dozens of companies.

Potential stand-in

Although Samsung's day-to-day business is maintained by the elite CEOs at each unit, analysts say they would be unwilling to make - and take responsibility for - costly decisions over large-scale acquisitions or investments without family approval.

"In South Korea, such decisions are often endorsed by the patriarch of a ruling family," said Chung Sun-sup, the head of corporate analysis firm chaebul.com.

Lee Jae-yong's sister Boojin, who is in charge of the group's fast-growing hotel business, was once touted as a potential stand-in.

But many dismiss the possibility, saying she has few allies and little management experience at Samsung Electronics - the crown jewel of the group.

Geoffrey Cain, the author of a forthcoming book on Samsung, pointed out Samsung Electronics had been able to make strategic moves despite Lee's detention in custody.

"The leader being in jail is a familiar story for chaebol groups, and one they can get around," he said.

"Samsung will not be doomed without Lee Jaeyong. Even if he gets a prison sentence, Samsung will be just fine. It's up to the specialists to make their own decisions."

Agence France-presse