Friday, April 27, 2012

Samsung Abbey - An Unroyal Feud

If South Korea had a king, it would be Lee Keun-hee. He is the country’s richest man. He is the Chairman of Samsung, Korea’s flagship business conglomerate, or chaebol. And, like so many other members of royalty worldwide, he is at the center of a dysfunctional family and its battles over money and power.

Sibling spats over inheritances are all-too-common the world over. However, such feuding is seldom played out publicly in decorum-obsessed Korea, especially amongst the elite families. Brothers and sisters don’t criticize each other in the media for being unfilial towards their deceased parents – that’s a serious no-no in a seriously Confucian society. But that’s what Lee Keun-hee – the third child of Samsung founder Kim Byung-Chul – has said about his eldest brother, Lee Maeng-hee. The accusation was in retaliation for the elder brother and Lee Keun-hee’s elder sister calling the Samsung Chairman “childish” and “greedy.”

At the heart of the matter is an equity stake in Samsung Life and other related companies currently worth over $600 million. Through an elaborate cross-ownership structure that would take a brigade of top-notched lawyers weeks to fully understand, Lee Keun-hee is able to exercise control over Samsung’s entire group (including Samsung Electronics) through Samsung Everland (a theme park and resort business) and Samsung Life. The ownership stake in question had been hidden away by the patriarch before his death in 1987 and ostensibly used during his life as a slush fund to influence politicians and curry favors. It seems that, until a few years ago, only Keun-hee amongst the family members knew about the shares. When the stash came to light through the handiwork of a whistle-blower who had worked under him, Keun-hee paid the requisite tax penalty, and then transferred the shares into his beneficial name, rather than divvying them amongst his siblings. His reasoning? The shares were his just deserts for having built Samsung into a world-beating business; his siblings were unworthy in his eyes, since they had been looking after other business interests over the past couple of decades. The court battles to come will bring up many arcane and complex legal issues, including those involving statute of limitations and inheritance law. Up for grabs is effective control of the Kingdom of Samsung itself.

The unfolding drama is a real-life soap opera that trumps the succession frenzy that recently took place across the border with North Korea’s leadership. It is the South Korea’s own reality show version of England’s Downton Abbey, but one that emphatically casts aside the stiff-lipped and starched manners of both cultures’ upper crust societies. From a purely entertainment perspective, let’s hope the show is only in its second season.

Details Here