Former Samsung boss gets suspended jail sentence

SEOUL: Samsung Group's former chairman, Lee Kun Hee, was found guilty of breach of duty for his role in causing losses at Samsung SDS.

The Seoul High Court handed Lee a three-year prison sentence because he knew SDS illegally sold convertible bonds to his son Lee Jae Yong in 1999 to transfer control of the group, Judge Kim Chang Sok said yesterday.

The sentence is suspended for five years, meaning the former chairman will continue to be free. Lee, 67, has one week to appeal the verdict, Kim said.

The judge said he opted not to imprison Lee, partly because of his role in helping the company's sales and profit grow.

Suspending the jail term highlights the tendency by South Korean courts to offer clemency to heads of the nation's family-run business groups for white-collar crimes, according to shareholder activists.

"The fact that the sentence was suspended is disappointing," Kim Sang Jo, a professor at Hansung University and head of Solidarity for Economic Reform, said yesterday.

"Taking note of one's contributions to a company's growth has been one of the most common reasons for judges to hand down suspended sentences."

SDS incurred 22.7 billion won ($269 million) in losses after its convertible bonds were sold at artificially low prices, Judge Kim said.

The elder Lee quit as chairman in April 2008 after he was indicted for causing losses at Samsung and for failing to pay taxes.

- BLOOMBERG