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Samsung icon Lee Kun-Hee dies at 78

October 25, 2020

The death of the chairman comes at a time when his son, the de facto leader of the Samsung Group, is grappling with legal issues. A potential restructuring could also be on the horizon over Lee's stakes in key companies.

Samsung head Lee Kun Hee
Image: Bae Jong-Hwa/dpa/picture-alliance

Lee Kun-Hee is synonymous with the name Samsung in South Korea. The chairman of one of the world's biggest conglomerates died on Sunday at the age of 78, six years after a heart attack hospitalized him.

"All of us at Samsung will cherish his memory and are grateful for the journey we shared with him. Our deepest sympathies are with his family, relatives and those nearest. His legacy will be everlasting," the company said in a statement.

Lee inherited control of the company from his father in 1987 and is credited with transforming Samsung into a global brand and the world's largest maker of smartphones, televisions and memory chips. Its businesses also encompass shipbuilding, life insurance, construction, hotels, amusement park operation and more. Samsung Electronics alone accounts for 20% of the market capital on South Korea's main stock market.

Forbes estimated Lee's fortune at $16 billion €13.5 billion) as of January 2017.

Legal troubles for Samsung's heir

Lee Kun-Hee's death comes at a time when the sprawling conglomerate is under immense scrutiny. His son and the de facto leader of the Samsung Group since 2014, Lee Jae-yong, has been embroiled in legal troubles since 2016.

Lee Kun-Hee's son, Jay Y. Lee, has been embroiled in legal troubles since 2017
Lee Kun-Hee's son, Lee Jae-yong, has been embroiled in charges that include bribery and embezzlementImage: Getty Images/Chung Sung-Jun

He was sentenced to five years in prison in 2017 after being found guilty of bribery, embezzlement and other charges. The bribery charges were related to Lee offering 8.6 billion won ($7 million/€6.4 billion) in bribes, including horses, to the daughter of a confidante of former President Park Geun-hye, to win government support for the controversial merger of two Samsung affiliates as a key step toward his succession.

He was released about a year later after winning an appeal, but in 2019 South Korea's highest court ordered a retrial.

The younger Lee made a rare apology in May 2020 over the scandal, pledging to ensure "there will be no more controversy over the succession." However, the situation took a turn for the worse in September after prosecutors charged Lee over the merger of the two business units that helped Lee take greater control of the group's flagship company, Samsung Electronics.

The charges included the practice of unfair transaction and manipulation of market prices under the Capital Markets Act, breach of trust during the course of business and false disclosure and accounting fraud under the External Audit Act. 

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A potential restructuring

Lee Kun-Hee's net worth and stakes in several Samsung companies are expected to spur the interest of investors after his death.

A potential restructuring of the group could be on the horizon, as Lee owned 20.76% of the insurance company, Samsung Life, which is the biggest shareholder of the Samsung Group's most important company, Samsung Electronics.

am/sms (AP, Reuters)