Ex-Samsung Boss Won't Be Imprisoned For Tax Evasion, Despite Guilty Verdict

by Mary Swire, Tax-News.com, Hong Kong

13 October 2008

The ex-Samsung boss found guilty of tax evasion in July has been spared a prison sentence after a breach of trust charge filed against him was dropped at the last minute.

Lee Kun-Hee, who chaired the South Korean branch of the technology conglomerate for almost 20 years, was indicted on charges of tax evasion and breach of trust earlier this year, bringing to an end a three month investigation launched by colleagues who suspected he was engaging in corrupt activities.

Following his resignation in April, Mr Lee went on to be formally convicted in July after further investigation confirmed that he had failed to pay around KRW47 billion (USD46mn) in taxes.

Despite the severity of his crime, Mr Lee was not automatically imprisoned, but told instead to pay a KRW110 billion fine whilst the courts calculated his sentence.

However, the charge which one prosecutor claimed would see Lee imprisoned for up to seven years has instead been overturned. According to the courts, the original breach of trust charge - which saw Mr Lee accused of setting up an illicit money transfer scheme to his son - has been deemed invalid, consequently relieving Mr Lee of his sentence.

According to Judge Seo Ki-seog of the Seoul High Court, the verdict was reached because: "The case of issuing stocks at a lower price to avoid inheritance and other taxes cannot be seen as causing losses to the company."

Mr Lee has also been cleared of all charges of bribery originally preferred against him.

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