South Korean giant Samsung Electronics appointed former convict and third-generation heir Lee Jae-yong as its executive chairman on Thursday.
Lee, who goes by Jay Y. Lee in the West, received a presidential pardon a few months ago, clearing the five-year employment ban that had been a part of his sentence and paving the way for him to formally resume control of the conglomerate.
The Samsung board of directors said in a brief statement that they had “approved the appointment of Jay Y. Lee as Executive Chairman of the company.” The board cited the “current uncertain global business environment and the pressing need for stronger accountability and business stability,” in coming to its decision, the statement added.
Lee, 54, had already been seen as de facto leader of Samsung after his father and former chairman Lee Kun-hee was taken ill and later died in 2020. Lee Kun-hee had also been separately convicted of bribery and tax evasion, and then pardoned.
Samsung, which means “three stars” in Korean, gained global recognition in the 1970s as it began mass producing home appliances. It swiftly became a consumer powerhouse boasting dozens of affiliates from electronics to hotels and insurance among others. Samsung made about 76 trillion South Korean won ($54 billion) in the third quarter of 2022 and has a market capitalization of almost $300 billion. It is one of a handful of family-controlled conglomerates known as chaebol, which dominate economic life in South Korea — others include LG and Hyundai Motor Co.
Lee had been convicted in 2017 of bribery, embezzlement, illegally moving assets overseas, concealing criminal proceeds and perjury, after being found guilty of bribing South Korea’s former president Park Geun-hye and her confidante to win favor for a merger deal. He was given five years in prison but was paroled after serving 18 months of his sentence.
The presidential pardon Lee received in August from President Yoon Suk-yeol reflects Samsung’s size and influence as well as the political popularity of extending forgiveness in the name of economic necessity. Polling shortly after his pardon showed overwhelming public support for the decision — with more than three-quarters of the South Korean public backing it.
Lee takes the helm of the multibillion dollar company as it weathers a global economic downturn. The company, which makes smartphones and semiconductor computer chips, will feel the pinch of less consumer spending and soaring inflation along with the ongoing Ukraine war, which has stifled international trade.
On the same day as announcing Lee’s promotion, the company issued its third quarter financial results noting a “challenging business environment.” It reported its operating profit had declined 23 percent from the previous quarter to 10.85 trillion Korean won ($7.7 billion) for the July-September quarter. It also noted a “decline” in memory chip business earnings and noted demand for consumer products “remained weak.”
Despite this, the company said its cellphone business was seeing “record revenue” and it expects overall “annual revenue to surpass the historical high set in 2021,” although “geopolitical uncertainties” were likely to continue to weigh in 2023, it added.
Lee said the company was at a “pivotal moment” that required swift and bold action, during a meeting with Samsung’s top executives earlier this week, the Associated Press reported.
Hamza Shaban and Aaron Gregg contributed to this report.