hankyoreh

Kim Ji-hyung, a former Supreme Court Justice and chairman of Samsung’s law compliance monitoring committee, holds a press conference in Seoul on Jan. 9. (Baek So-ah, staff photographer)

The first criminal division of Seoul High Court under Hon. Jeong Joon-young is adopting an unusual trial schedule for the time being. In response to Samsung’s creation of a “law compliance monitoring committee” to show its efforts to address illegal actions within its own ranks, the court that is hearing the case involving allegations of illicit practices amid the management succession of Samsung Electronics Vice President Lee Jae-yong following a reversal and remand decision decided to form its own “expert review committee” to examine its efficacy, and a trial preparation hearing is being held to initiate the discussions. In short, it’s a process of the court creating its own committee to “monitor the monitoring committee.”

Obviously, a lot has been said since the outset about both the law compliance monitoring committee and the “monitoring committee monitoring the law compliance committee.” The Samsung monitoring committee was created at the court’s instructions. In October of last year, Hon. Jeong Joon-young declared the need for a “strong law compliance monitoring system to prevent similar crimes from happening again.” Samsung proceeded to announce the creation of its monitoring committee. After Samsung’s swift response, the court announced that it would be reflecting the monitoring committee’s activities in its sentencing decision and declared plans to form its expert review committee.

Lee Jae-yong has not denied the substance of the criminal allegations. This means that the remaining issue is how much of a sentence will be handed down in the trial after the remand and reversal decision. The likelihood of this trial leading to actual prison time appears greater after the Supreme Court delivered a guilty ruling on Lee’s embezzlement and bribery charges and concluded that such actions had been part of a “quid pro quo” arrangement to pave the way for his individual succession of management authority.

The best-case scenario for Lee would be a suspended sentence after a significant reduction on the part of the court to bring his prison sentence down to three years from the predicted period of five years or more. Since the beginning of the trial, however, the court has given the appearance that it is establishing a basis for reducing the sentence -- a development without precedent in trials involving financial offenses. This has raised questions about equity and appropriateness, as it basically involves providing a favorable opportunity to a specific defendant.

Questions have also been raised about the monitoring committee’s operation. The committee’s activities are limited to information provided by the company. In addition to being a defendant, Lee Jae-yong is also an immensely powerful group leader. It is impossible to know for certain that the committee will be free from his influence. To begin with, one of the committee’s members is Samsung Electronics Corporate Relations President Rhee In-yong. A fellow alumnus of the Seoul National University Eastern history department, Rhee is counted among a select few within the group who is capable of communicating directly with Lee. It is inevitable that there would be a question mark hovering over the monitoring committee’s autonomy. Samsung money is also being spent on the committee -- meaning that even more company money is going into an organization that was created in the first place to investigate Lee’s embezzlement of company money.

The special prosecution team is against the monitoring committee’s activities being reflected in the sentencing. The trial preparation hearing was originally set for Feb. 14, but ended up being postponed so that opinions could be adequately presented. The next question is about the hearing after that, which is expected to see a heated debate between Lee’s team and the special prosecution team.

Also drawing attention is the involvement of former senior judges with close connections to the Samsung management succession issue on both the monitoring committee and the monitoring committee monitoring committee. The chairman of the monitoring committee is Kim Ji-hyung, a former Supreme Court Justice. Kim was the presiding judge when the Supreme Court acquitted Samsung Electronics Chairman Lee Kun-hee in 2009 on charges of passing down management authority to his son Lee Jae-yong illegally through the issuance of Samsung Everland convertible bonds (CBs) at giveaway prices. The court in the post-remand trial proposed including former Constitutional Court Justice Kang Il-won on the expert review committee -- a figure who took part in the decision to impeach former President Park Geun-hye, which was connected with Choi Sun-sil (formerly known as Choi Seo-won). Lee Jae-yong is on trial for providing bribes to Choi’s daughter.

Whether Lee receives prison time or a suspended sentence, the matter is in the justice minister’s hands once the guilty verdict is upheld. The terms of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, which restricts employment at companies in cases of economic offenses such as embezzlement, would throw a wrench in Lee’s continued employment at Samsung Electronics -- an area that is under the Ministry of Justice’s jurisdiction. In cases involving violations of the employment restrictions, the justice minister is obligated to demand that the company dismiss such individuals, and the company leader must comply without delay. The failure to enforce this obligation even once under previous administrations has raised ongoing questions about the provision in question being mere window-dressing, prompting the Ministry of Justice to launch a “special economic crimes management committee” last November.

In January, the special economic crimes management committee made its first ruling -- but it ruled not to demand that a company dismiss someone subject to employment restrictions, but actually to grant its approval. It decided to approve the employment of an unnamed individual subject to employment restrictions “in consideration of the fact that the affected company is a family business, among other factors.” This was in reflection of a passage toward the end of the Aggravated Punishment Act’s provision on employment restrictions, which states that they “shall not apply where [the individual in question] obtains approval of the Minister of Justice as prescribed by Presidential Decree.”

Will Lee Jae-yong pay for his crimes with a jail sentence, or will his sentence be suspended? Will he hang on to his vice chairman position after sentencing or step down? The real discussion is just about to get started.

By Song Gyung-hwa, staff reporter

Please direct comments or questions to [english@hani.co.kr]