Samsung heir's release raises hackles along with hopes

Seoul

SAMSUNG Group heir Jay Y Lee's release from jail on bribery charges has some in South Korea hoping for new investments and jobs from the massive conglomerate, despite ongoing concerns over the cosy ties between government and business leaders.

Dubbed the "Republic of Samsung", the company's businesses reach deep into many parts of South Koreans' lives, and are intertwined with thousands of small and medium-sized subcontractors and start-ups.

After a year in detention, the heir to South Korea's largest business empire walked free on Monday as an appeals court suspended his jail term for bribery in a corruption scandal that toppled the former president last year.

Many South Koreans in the business community welcomed Mr Lee's release and anticipated the national economy would feel positive effects from his comeback, including new investment in local industries and more domestic jobs.

That could help ease a backlash from other South Koreans upset over the cosy ties between politicians and the powerful family-run conglomerates, or chaebols, which have been implicated in a series of corruption scandals in recent decades, several business lobby groups and corporate analysts told Reuters.

"Parts of our community feel Mr Lee's suspended jail sentence is against the people's will, but if he continued to stay in jail, it would have been a burden not just to Samsung but to all its countless subcontractors here," said Kim Kyung-man, head of economic policy for the Korea Federation of SMEs, a lobby group for small and mid-sized firms.

A Samsung spokesman declined comment.

Samsung investors said Mr Lee may follow the model of other suspended or jailed chaebol leaders who made bold moves for their companies once reinstated.

Since food-to-entertainment CJ Group's chairman returned in May 2017 after being pardoned for tax evasion and breach of trust, the company has carried out a slew of acquisitions and investments.

The increased investment since Lee Jay-hyun rejoined management likely boosted employment at CJ Group last year, a company official said, but detailed numbers have not yet been compiled for 2017.

Energy-to-semiconductor producer SK Group, South Korea's third-largest conglomerate, has been on a growing investment spree since 2015, when chairman Chey Tae-won was granted a presidential pardon over his conviction for embezzlement.

SK's memory chip unit has been investing heavily, while SK units acquired chip material maker LG Siltron and became part of the winning bid for Toshiba's chip unit.

Samsung has some history of its own.

Mr Lee's father was convicted of tax evasion in 2009, and had a three-year sentence suspended, with judges citing his "contribution to the country's economic development" and his "patriotism through business enterprise from job creation".

The elder Mr Lee was later pardoned, allowing him to lead the campaign to secure the 2018 Winter Olympics for South Korea.

"Whenever a major chaebol leader has been released from jail, they have tended to increase social contribution," said Park Ju-gun, head of research firm CEO Score. "Samsung also could become active in supporting public works such as the current administration's drive to increase jobs."

The suspension of Lee's sentence represents a setback for South Korean President Moon Jae-in, however, who was elected in May on a platform of getting tough with conglomerates and ending the practice of pardoning corporate tycoons convicted of white-collar crime.

Frustration has grown that the wealth amassed by the largest conglomerates has not trickled down to average workers in Asia's fourth-largest economy.

Youth unemployment hit a record high of 9.9 per cent in 2017, while one-third of workers were in temporary jobs paid less then regular positions, according to latest data from Statistics Korea. REUTERS