Bloomberg News

Samsung Chairman’s Brother Appeals Court Ruling on Group Stake

February 15, 2013

Samsung Electronics Co. Chairman Lee Kun Hee’s brother appealed part of a Seoul court’s ruling against him and other relatives seeking a 4.1 trillion-won ($3.8 billion) stake in the family group.

The chairman’s older brother, Lee Maeng Hee, is seeking about 9.6 billion won, Yoo Seung Nam, a lawyer for the plaintiffs, said by phone today. Samsung Group declined to comment, Kevin Cho, a spokesman for the South Korean company, said by phone. Oh Jong Han, a lawyer for Lee Kun Hee, said the chairman’s legal team will respond after studying the appeal, which sends the case to a higher court.

The Seoul Central District Court ruled Feb. 1 that Lee Maeng Hee and four other family members failed to prove their claims to stakes in Samsung Electronics and Samsung Life Insurance Co. The court also ruled that the period for relatives to make inheritance claims had expired.

Samsung Electronics surged 44 percent in Seoul trading last year while barreling ahead of competitors including Apple Inc. (AAPL:US) and Sony Corp. as the world’s biggest maker of mobile phones and TVs, boosting the value of the disputed stakes in Samsung Group. A victory for the plaintiffs could lead to a dispute over control of Samsung Electronics, Chae Yi Bai, a researcher at the Center for Good Corporate Governance in Seoul, said before the Feb. 1 ruling.

It also would have meant that Lee Kun Hee, South Korea’s richest man, no longer would be the largest investor in Samsung Life.

Not a Dime

Lee Maeng Hee and sister Lee Sook Hee, who don’t have any role in Samsung Group, sued in February 2012, claiming they were entitled to additional stakes.

Lee Kun Hee holds 41.5 million shares, or about 21 percent, of Samsung Life, according to data compiled by Bloomberg. The elder brother wanted at least 9.65 million shares and the sister wanted 2.6 million shares.

Lee Kun Hee said before the Feb. 1 ruling he wouldn’t give “a dime” to his family because inheritance matters had been settled by his father, and he would appeal a loss, according to media reports.

The public holdings of Lee Kun Hee are valued at $11.5 billion, according to data compiled by Bloomberg. The family conglomerate, Samsung Group, controls more than 80 companies making armored vehicles and artillery guns for South Korea’s military, oil tankers, amusement parks and apartment complexes.

Dried Fish

Suwon-based Samsung Electronics boosted fourth-quarter profit 76 percent after shipping one of every three smartphones globally and selling one of every four flat-panel TVs. The company accounted for 44 percent of Samsung Group’s total revenue in 2011.

The group generates about 20 percent of South Korea’s gross domestic product.

Lee Byung Chul founded what is today South Korea’s biggest business group in 1938 and died in 1987 without leaving a will. Lee Kun Hee transformed the dried-fish and produce company into the maker of Galaxy smartphones and TVs using organic light- emitting diode technology.

The chairman’s lawyer said the family patriarch repeatedly expressed his desire for Lee Kun Hee to take over the group.

The dispute dragged Lee Kun Hee, a lung cancer survivor, back into a courtroom following a series of run-ins with the law. He was convicted of paying bribes to former Presidents Chun Doo Hwan and Roh Tae Woo in 1996 before receiving a pardon from then-President Kim Young Sam a year later.

Lee quit as chairman of the group and electronics company in 2008 after being charged with tax evasion. He received another presidential pardon in 2009 and reassumed his post running Samsung Electronics in 2010.

In December, he promoted his son, Lee Jae Yong, to vice chairman of Samsung Electronics, putting him a step closer to succession.

To contact the reporter on this story: Jungah Lee in Seoul at jlee1361@bloomberg.net

To contact the editors responsible for this story: Michael Tighe at mtighe4@bloomberg.net


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