While being questioned for allegedly bribing South Korea’s president, Samsung Group’s Jay Y Lee is locked up at a prison notorious for housing convicted billionaires, a serial killer and the hangman’s noose. That doesn’t mean he’s given up being the boss.
Lee doesn’t have a phone or computer and technically is confined to his cell almost all day, yet he’s allowed to meet with lawyers in a separate room for as long as he’d like. He could use the attorneys to communicate with lieutenants at the conglomerate and stay involved in the decision-making, said Kwon Young-june, a professor who researches corporate governance at Seoul’s Kyung Hee University.
“It’s a backward culture found in a country like South Korea,” Kwon said. “Executives can retain their posts even after being jailed because they also own the companies they run.”
Precedent is on Lee’s side. Hanwha Group Chairman Kim Seung-youn and SK Group Chairman Chey Tae-won continued to influence their businesses even after being convicted of crimes and imprisoned. Not only did they keep their titles while behind bars, they are still actively involved with the company.
The case against Lee, who hasn’t been formally indicted, hasn’t advanced as far as those, with both Samsung and Lee denying he did anything wrong. Yet the conditions of his confinement show how serious the consequences of the investigation have been so far.
The billionaire businessman wears a standard blue prison uniform, is only allowed outside to exercise for an hour a day and can’t access the internet, according to a person familiar with his detention. His cell does have a TV set — though it’s made by rival LG Electronics and only shows prison-approved programs, the person said, asking not to be identified because the details aren’t public.
Lee, 48, is being detained for questioning in a corruption probe that prompted the impeachment of President Park Geun-hye. The vice chairman of Samsung Electronics is accused of bribery, perjury and other offenses related to Park and her confidante. The alleged motive is government support for a corporate merger making it easier for him to control the consumer-electronics giant.
A special prosecutor appointed to investigate the Park scandal has until the end of this month to issue an indictment. If Lee ultimately is convicted on all charges, he faces a sentence of more than 10 years.
Samsung said Lee isn’t running the chaebol from the detention centre.
“It is too early to speculate about corporate management,” Samsung said in an e-mail. “Currently, the priority is preparing the legal defence so the truth can be revealed in future court proceedings. Samsung Electronics has a strong management team in place, led by its three CEOs who are in charge of business operations.”
Lee is at the Seoul Detention Centre, located outside the industrial city of Anyang, south of Seoul. His fellow inmates include Park’s former chief of staff, Kim Ki-choon, and Yoo Young-chul, a self-confessed cannibal on death row for killing about 20 people.
The compound houses an execution chamber. The nation’s last hanging was in 1997.
“It’s depressing, lonely and miserable,” said Park Lae-goon, 55, an activist who spent almost four months there in 2015 after being arrested on charges of leading illegal protests. “It’s certainly no place for wealthy businessmen to feel comfortable.”
And that may impede Lee’s ability to keep his hands on the tiller of the sprawling group, said Park Nam-gyoo, who teaches business management at Seoul National University. Lee could still manage “low-intensity, maintenance issues,” but he may not be able to spearhead the type of transformation Samsung needs to ward off competitors, he said.