What a 5-year prison sentence for the head of Samsung means for the tech industry


Don’t look now, but the next chapter in Samsung’s embarrassing political scandal has been penned. In case you aren’t caught up, Samsung has been embroiled in political trouble in South Korea relating to bribery.

It’s a scandal that included the country’s then-president Park Guen-hye accepting bribes from Samsung Group’s heir Lee Jae-yong for purposes of securing lucrative business contracts and other favors. Guen-hye was impeached based on the findings.

Fast forward to today, and Lee Jae-yong is taking his punishment on the chin, as well — Korean courts have sentenced him to 5 years in prison.

No matter which way you slice it, this doesn’t look good for Samsung as a whole and it’s a huge blight on the company’s reputation in South Korea as far as ethics are concerned. But is Samsung going down because of it?

The quick and easy answer is “likely not.” Lee Jae-yong is the heir to the Samsung throne — meaning he’s the next person in his family entitled to the control and wealth of everything Samsung is — and a prison sentence doesn’t really change that fact unless they have some family succession rules in place. To compare, Lee Jae-yong’s father and various other top Samsung executives have also been tried and convicted for similar issues in the past, however those charges were either dropped or sentences were commuted so greatly that they probably never saw the inside of a jail cell.

It becomes clearer when you consider just how big Samsung truly is. Us techies see them as the hot consumer electronics company of the moment offering the best devices and services on the market, but there are many cogs in the Samsung Group wheel. Their various businesses include, but certainly aren’t limited, to:

  • Advertising
  • Construction
  • Entertainment
  • Financial services
  • Hospitality
  • Information and communications technology
  • Medical and health care services
  • Retail development
  • Shipbuilding

And that’s just the abstract view. Samsung has companies on top of companies on top of companies in each of these categories.

It’s likely that Lee Jae-yong doesn’t even oversee the day-to-day operations of Samsung’s various non-macroscopic dealings, with conglomerate heirs like him likely being several times removed from the equation as they kick back to collect (and, apparently, illegally dish out) the checks.

So, that brings the big question: does this spell the beginning of a big downfall for Samsung? Probably not. Their overzealous owner got a bit too greedy and he will take a hit for it, but Samsung is likely more concerned with the changing market trends affecting their bottom line than a political scandal that a massive company like theirs can’t shoulder the full blame for.

If anything, this whole episode is just a big warning shot — nay, it’s a cold-blooded example — from Korean justice heads that even the country’s biggest powers are not exempt from the law. And yes, your shiny new Galaxy Note 8 should still arrive on time.

via The Guardian

Quentyn Kennemer
The "Google Phone" sounded too awesome to pass up, so I bought a G1. The rest is history. And yes, I know my name isn't Wilson.

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