Samsung Chairman Indicted For Tax Evasion

Samsung Group Chairman Lee Kun-hee arrives for questioning by special prosecutors probing alleged corruption at the special prosecutor's office in Seoul, South Korea, Friday, April 4, 2008.
AP Photo/Ahn Young-joon
Special prosecutors probing alleged corruption at Samsung Group said Thursday they indicted Chairman Lee Kun-hee for tax evasion and breach of trust while clearing the conglomerate of bribery allegations.

The announcement concludes a three-month probe into a slew of alleged wrongdoing at South Korea's biggest industrial conglomerate. Lee and close family members have been summoned for hours of questioning during the investigation.

The prosecutors said in a statement that they would not arrest Lee as it would "cause enormous disruptions" in Samsung corporate management. The "negative repercussions on our economy would be very big amid the extremely competitive global economic situation," they said.

The investigation began in January and was spurred by claims made late last year by a former top Samsung attorney. The conglomerate has denied the allegations of bribery and other corruption made by its former employee Kim Yong-chul.

The probe has also examined long-simmering allegations by civic groups that South Korea's biggest family-run conglomerate has used dubious financial transactions to ensure corporate control passes from Samsung Chairman Lee to his son.

The investigation essentially agreed with that view.

"Samsung Group has a lot of structural problems, such as illicit transfer of management control," the prosecutors' statement said.

"It is the hope of our investigation team that this probe would serve as an opportunity for Samsung to shed these problems and be reborn as an undisputed ultra first-class global company."

The 66-year-old Lee, South Korea's most influential business executive, was called in twice by investigators for questioning about the allegations.

After the second round last Friday, Lee said that he assumed responsibility for the scandal, adding that he would consider a major revamp at Samsung and hinted at even possibly stepping down as chairman.

Investors have largely shrugged off the allegations and ensuing investigation. Shares in Samsung Electronics, for example, have jumped 23 percent since Kim, the former Samsung lawyer, came forward in early November.

The scandal, however, has struck a nerve in broader society, where pride in the conglomerate's success as South Korea's top business group meets concerns that it has too much power and influence.

Founded 70 years ago, the nearly 60-company strong conglomerate also has interests in shipbuilding, insurance, apparel and other industries. By some estimates, group companies account for as much as one-fifth of South Korea's total exports.
© MVIII The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed