Back in 2003 two of the influent Samsung top managers were accused of financial wrongdoing including a scheme that provided a workaround for buying convertible corporate bonds at price significantly lower than the market prices in the mid-90’s. According to the representatives of South Korean law enforcement offices, Kun-Hee’s relatives received illegal revenues amounting in total to $93 million. In October 2005, Hur Tae-Hak and Park Ro-Bin were found guilty of illegal financial operations involving corporate bonds and were sentenced to three and two years in jail, the punishment respited five years and three years respectively.

Lee Kun-Hee

The very fact of Lee’s family successfully evading the dangerous trap raised a wave of negative public response targeting Lee’s alleged corrupting influence in the government, law enforcement department and media.

The scandal took a fresh turn by the end of 2007, when the former head of Samsung’s law office Kim Yong-chul accused the head of the company in a TV interview of accumulating money intended to bribe high-ranking functionaries and prosecutors. The paper submitted to the prosecutor’s office stated that the heads of Samsung departments found guilty in 2003 were responsible for no wrongdoing and were forced to supply false evidence in accordance with his personal directives in order to defend Lee. A number of key figures from the Ministry of Finance and the Tax Office are presumed to have been the target of bribery, as asserted by Yong-chul.

Kim Yong-Chul

«I'm not trying to escape responsibility for my actions, my only goal is to do away with the rampage of lawlesness and weaken the company's corrupting influence on the society», - stated Kim Yong-chul, the former prosecutor who had been employed as Samsung’s head lawyer until 2004.

The official investigation was initiated to resolve the lawsuit filed on behalf of Kim by two influential organizations – the People’s Solidarity for Participatory Democracy and Lawyers for a Democratic Society.

Initially, in addition to the tax evasion charge, the investigation of Kun-Hee’s activities was being done in several other directions, including the creation of a ‘slush fund’ (estimately equaling to more than $200 in total), large-scale bribery in the upper echelons of the governmental offices and a scheme to take over the Samsung company.

Supporters of Lee Kung-Hee in the streets

Lee Kun-Hee rejected all accusations and claimed the non-existence of the aforementioned ‘slush fund’. The investigation confirmed these statements; after it was over, Lee Kun-Hee was freed of all accusations except the tax evasion charge. After the remaining accusations were brought forward, Lee announced his resignation from service in the company.

Lee Kun-Hee wasn’t arrested and detained prior to the court hearing; the prosecutor’s decision was motivated by the possible risk of Samsung suffering serious losses, thus leading to a heavy blow on the state economics (Samsung makes for about 20% of the country’s export)

The first hearing of the case was conducted on July 12. The prosecutor requested a seven years’ sentence and a fine of $350 as an equitable verdict.

Nevertheless the court issued a verdict pronouncing a conditional punishment of three years in jail combined with a $109 million fine on Lee Kun-Hee found guilty of tax evasion.

Samsung corporation ranks as one of the world’s leading electronics manufacturers, also taking a considerable part in financial, shipbuilding, chemical and other spheres of industry. The company has more than 750,000 employees worldwide, its yearly revenue exceeds $14 billion.