South Korean police named Samsung Electronics Chairman Lee Kun-hee as suspect on Thursday. They alleged that he is involved in an 8.2 billion won ($7.5 million) tax evasion case using the bank accounts held by employees.
The family of Samsung, the country’s biggest business empire, has been dogged with a series of scandals.
Just earlier this week, the chairman’s son and heir to the company, Jay Y. Lee was released from detention. This was after an appeals court cut his sentence to 2-1/2 years and suspended it for four years. The younger Lee was detained due to cases of bribery and corruption.
Chairman Lee has been hospitalized since his heart attack in 2014. Until Jay Y. Lee’s imprisonment, he had been regarded as the de facto head of the group.
“Samsung chairman Lee Kun-hee and a Samsung executive managed funds in 260 bank accounts under names of 72 executives, suspected of evading taxes worth 8.2 billion won,” said the Korean National Police Agency in a statement. The police are planning to send the case to prosecutors.
They then added that the accounts were found during probes into alleged improper payments for the renovation of the Lee family’s residence. The accounts were said to hold some 400 billion won.
The police said that the elder Lee cannot be questioned due to his physical condition. Samsung declined to comment.
Events in Domino Effect
With the graft case that led to the arrest of Jay Y. Lee last year and the impeachment of former South Korea president Park Geun-hye, Samsung was driven to vow improved transparency in corporate governance. The company also gave the heads of the group’s affiliates more autonomy from the Lee family.
In late 2017, Samsung dismantled its corporate strategy office.
President Moon Jae-in was elected after the corruption scandal, succeeding Park’s presidency. His new liberal government swore to put family-run conglomerates under stronger scrutiny. He also promised to end the practice of pardoning corporate tycoons convicted of white-collar crimes.
Jay Y. Lee has not been back in office since his release on February 5. Despite this, members of the Korean business community are expecting him to take the reins again soon. They also assume the will be investing more in the business to soothe public anger with the new jobs that will be created.
The younger Lee apologized for not showing his best side upon his return home from prison. He also stated that he will be doing his best but did not provide any specifics.
During his year behind bars, Samsung Electronics earned record profits after benefitting from a memory chip “super cycle”.
Shares in Samsung Electronics were up 1.1 percent compared to a 0.5 percent rise in the wider market.