Samsung's revenue remains unimpacted as South Korea faces pressure to pardon heir

Samsung scion and vice chairman Lee Jae-yong might be in prison under bribery charges but the company's revenue remains unimpacted. For the first quarter of 2021, it posted a 6% revenue increase to US$58 billion. According to Samsung, this is a record number for the first quarter.

Its mobile communications business saw a significant jump as sales of flagship and mass-market smartphones increased and contributions of products in the device ecosystem such as tablets, PCs, and wearables grew. Overall, its IT and mobile communications division posted revenue of US$29.5 billion. Meanwhile, its consumer electronics division comprising TV and appliances posted consolidated revenue of about US$11.5 billion.

Lee has been in prison for close to four months as a result of bribing former South Korean president Park Geun-hye and her close confidante. According to multiple media reports including the Associated Press, the bribe was to obtain government support for a 2015 merger between two Samsung affiliates and the move reportedly helped Lee secure more control over the company. Park was ousted in 2017 following protests over her corruption scandal and in January this year, the South Korean court upheld her 20-year jail term, multiple media outlets including BBC said.

Amidst the revenue growth at Samsung, South Korean president Moon Jae-in is facing pressure to pardon Lee as concerns about the company’s future grows. Several individuals including business leaders and Buddhist monks have called upon Moon to release Lee to ensure Samsung’s speed and decisiveness is not impacted as a result of the heir’s imprisonment, the AP said.

Samsung is no doubt the most dominant brand in South Korea. In fact, it was ranked the nation’s most valuable brand by Brand Finance in 2019 and 2020. The relationship between Samsung and South Korea has led to the country being known as the “Republic of Samsung” at times, with media outlets including The Washington Post and the Los Angeles Times using the term.  

According to AP, Moon is taking into consideration the growing competition in the semiconductor industry and public sentiment about fairness before making a decision on whether to pardon Lee. Meanwhile, Samsung told AP that Lee is responsible for contributing to its overall strategic direction and making decisions concerning Samsung’s future growth. This will be done based on his insights and connections with global business leaders.

This is not the first time Samsung has been embroiled in a scandal. Former chairman and Lee Jae-yong’s late-father, Lee Kun-hee, was also previously in the limelight for crimes including bribery and tax evasion. In 2018, South Korean police named the elder Lee as a suspect in a US$7.5 million tax evasion case. According to Reuters, he and a Samsung executive was said to have managed funds in 260 bank accounts under names of 72 executives and evaded taxes.

Photo courtesy: 123RF

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