Why Vice Chairman Lee Jae-yong Should Be Pardoned

Public opinion favorable to pardoning Samsung Vice Chairman Lee Jae-yong is spreading. The discussion of a pardon, sparked when Democratic Party member of the National Assembly Lee Won-wook mentioned its necessity, is winning broad public support. Given the already weakened economic conditions caused by COVID-19 and the prolonged decline in economic vitality, a pardon for Vice Chairman Lee would likely be seen as a decision for the future of our economy and as an act of politics of integration.

Why is the argument for a pardon so quickly gaining public sympathy? The reason is the growing concern that Samsung’s future could darken as the semiconductor war heats up amid U.S.-China tensions. Samsung is a core engine driving our economy. If Samsung Electronics were to lose its leadership in semiconductors, it would deal a major blow to our economy.

The entity threatening Samsung is Taiwan’s TSMC. These two companies are the only firms in the world that have secured competitiveness in the market for high-density semiconductors of 7-nanometer-class and above, but there is a forecast that only one of them will remain in the future. The Economist predicted that the winner would be TSMC.

Once a company falls behind in semiconductor leadership, it is difficult to recover. Samsung is facing such a critical moment. While Vice Chairman Lee is absent, the global semiconductor market is changing rapidly. The absence of leadership can only be fatal for a company. Samsung has the best professional managers in Korea and is a company where system-based management is well established. Even so, no one can truly fill the vacuum left by the top executive. Unlike public corporations or government agencies, a company’s future is not guaranteed merely because it continues to operate and be maintained.

Poll results are considerably favorable to a pardon. According to a Sisa Journal-Sisa Research poll conducted on May 11, 76% of respondents supported a pardon, overwhelmingly outnumbering those opposed. Favorable public sentiment is arising in many areas, to the extent that leaders of six major religious groups submitted a petition for pardon to the Blue House. This means that a broad national consensus has formed.

It has been revealed that the inheritance tax burden on the estate of the late Chairman Lee Kun-hee was an extremely high 12 trillion won. This is 3.4 times the 3.4 trillion won borne by Steve Jobs’s bereaved family after his death in 2011. Because of one of the highest inheritance tax rates in the world, business leaders are in a situation where it is difficult to maintain management control. This is because the top tax rate of 50% is combined with an additional 20% premium for the largest shareholder. Maintaining such an unfriendly system for management succession is excessively harsh on business leaders.

There were four pardons under the Moon Jae-in administration. At the end of 2017, 6,444 people were pardoned; in 2019, two rounds pardoned 4,378 and 5,174 people; and at the end of 2020, 3,024 people were pardoned. Political protesters, politicians, and election law offenders were included, but businesspeople were excluded. It is necessary to give full consideration to the lives of citizens suffering economic hardship.

While imprisoned, Vice Chairman Lee faced a medical crisis when his appendix burst and he had to undergo emergency surgery. It was said to be a major operation requiring the removal of part of his colon. Even so, Vice Chairman Lee returned to the detention center despite medical staff recommending further recuperative treatment, saying it could be seen as special treatment.

As the head of a global company, Vice Chairman Lee has built networks with leading figures around the world over many years. When COVID-19 broke out, he found a solution to the mask shortage, and when vaccines became urgently needed, he made a major contribution to our society by using his exchanges with global leaders to help address the situation.

As Samsung’s leader, he is someone who can illuminate the future of our society. For our society to expect greater contributions from Vice Chairman Lee and give him the opportunity to play a larger role is a wise and prudent choice for the future.

Sung-no Choi

President, Center for Free Enterprise (CFE)

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Original title: 이재용 부회장 사면이 필요한 이유

Author: Sung-no Choi

Date: 2021-05-21

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=23722