August 24, 2017 / 3:00 PM / in a year

Seoul court to rule on Samsung scion Lee in bribery trial

    * Prosecutors seek 12-year jail term on charges including
    * If found guilty, Lee may face longest jail time for
chaebol heir
    * Appeals likely to go to Supreme Court next year - experts
    * Lee's extended absence could slow long-term strategic

    By Joyce Lee and Soyoung Kim
    SEOUL, Aug 25 (Reuters) - A South Korean court will rule on
Friday on corruption charges against Jay Y. Lee, the billionaire
head of Samsung Group, after a six-month trial in a nationwide
bribery scandal that triggered the dismissal from office of the
country's president.
    Lee, the 49-year-old heir to one of the world's biggest
corporate empires, has been held since February on charges that
he bribed then president Park Geun-hye to help secure control of
a conglomerate that owns Samsung Electronics            , the
world's leading smartphone and chip maker, and has interests
ranging from drugs and home appliances to insurance and hotels.
    Prosecutors have demanded a 12-year jail sentence for Lee,
who also faces charges of embezzlement and perjury - potentially
the longest prison term given to a South Korean business leader.
    The third-generation de facto head of the powerful Samsung
Group, Lee has effectively directed operations since his father,
Lee Kun-hee, was incapacitated by a 2014 heart attack.
    Some investors worry that a conviction and long jail term
could leave a leadership vacuum, with no one to take the big
decisions at Samsung, which has over five dozen affiliate
companies and assets of 363.2 trillion won ($322.13 billion).
             Its listed companies make up around 30 percent of
the market value of South Korea's KOSPI         stock index.
    Whatever Friday's verdict, lawyers expect an appeal which
could go all the way to the Supreme Court, with a final ruling
probably next year.             
    Prosecutors have said Samsung's contributions to two funds
backed by Park aimed to secure government support for a merger
of two of its affiliates to tighten Lee's grip on the
conglomerate. Lee has denied wrongdoing, and his lawyers say the
2015 merger was done for business merits.
    Samsung, founded in 1938 by Lee's grandfather, is a
household name in South Korea and a symbol of the country's
dramatic rise from poverty following the 1950-53 Korean War.
    But over the years, it has also come to epitomize the cosy
ties between politicians and powerful family-controlled business
groups - or chaebols - which have been implicated in a series of
corruption scandals.
    South Koreans, who once applauded the chaebols for
catapulting the country into a global economic power, now
criticize them for holding back the economy and squeezing
smaller businesses.
    Investors say shares in chaebol firms trade at lower prices
than they would otherwise because of their opaque corporate
governance - the so-called 'Korea Discount'.
    "Chaebol leaders used to get the same sentencing every time,
there was even a saying called the '3-5 law' - three years
sentencing, five years probation," said Park Sangin, professor
of economics at Seoul National University. "If Lee receives a
heavy sentence, it can be seen as the shattering of the
'too-big-to-jail' trend of the past."
    Lee's father was convicted of tax evasion in 2009, and had a
3-year sentence suspended, with judges citing his "contribution
to the country's economic development" and his "patriotism
through business enterprise from job creation." He was pardoned
four months after the final ruling.
    South Korea's new president, Moon Jae-in, who replaced the
disgraced Park after a May 9 election, has pledged to rein in
the chaebols, empower minority shareholders and end the practice
of pardoning corporate tycoons convicted of white-collar crime.
    Lee's trial has gripped the nation, and Friday's closed
courtroom verdict will be witnessed mainly by lawyers and
Samsung officials. Around 30 members of the public will attend,
having won seats through a lottery.
    The ruling is expected to affect the verdict in Park's own
corruption trial, expected later this year, as prosecutors
argued the two took part in the same act of bribery.
    Prosecutors have also indicted top Samsung executives over
the bribery scandal, including Choi Gee-sung, who headed the
corporate strategy office, dubbed the 'control tower'. It has
since been disbanded, and Choi has resigned.             
    Experts were divided on how Friday's ruling might go, with
some lawyers expecting Lee to be found innocent on the major
charges, saying much of the evidence at trial appeared

 (Additional reporting by Yuna Park and Haejin Choi; Editing by
Ian Geoghegan)
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