South Korea

Prosecutors charge Samsung chief with tax evasion

Article published on the 2008-04-17 Latest update 2008-04-18 09:11 TU

Prosecutors leave Lee Kun-hee's office
(Photo : Reuters)

The boss of South Korean electronics firm Samsung, Lee Kun-hee, has been charged with corruption, following a three-month investigation. Samsung is South Korea's largest company. Prosecutors said they would not formally arrest Lee because it could have "negative repercussions" for South Korea at a challenging time for the economy.

Lee Kun-Hee is set to stand trial for corruption as well as evading $114 million of taxes, the special prosecutors said at a press conference in Seoul.

Lee was charged with breach of duty for incurring losses at Samsung, when he helped his son gain control of units of the group. Samsung said the case does not mean Lee or any of its top managers would step down and has repeatedly denied allegations of wrongdoing.

Nine other Samsung executives were also charged. Lee, one of South Korea's richest men, has denied the allegations.

The chief prosecutor said that the crimes were "very serious" and deserve "heavy punishment in court", although other corporate chiefs have been treated with relative leniency in previous cases.  

The prosecutors noted many structural problems at Samsung, such as illicit transfer of managerial rights, lack of transparency in terms of book-keeping and direct control over subsidiaries through an internal agency whose legal basis seems dubious to them.

The complex management structure of South Korea's conglomerates known as chaebol, which often allows founding families to control a group through cross-shareholdings despite holding a relatively small stake. After being questioned last week Lee said he took responsibility for the case and would consider reforms.