Family feud may disrupt Samsung succession plans

Tue May 29, 2012 4:28pm EDT
 
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By Miyoung Kim

SEOUL (Reuters) - A family feud at Samsung Group, parent of the world's largest electronics company by revenue, could upset the smooth handover of control of a smartphones-to-ships conglomerate whose $234 billion annual sales are bigger than the economy of Singapore.

Lee Kun-hee, South Korea's richest man and chairman of Samsung Electronics (005930.KS: Quote), on Wednesday defends three lawsuits from his elder brother, Lee Maeng-hee, a sister and another relative, who claim $1 billion of assets - mainly shares in Samsung Life 032830.KS, an insurance company at the heart of a web of Samsung Group cross-shareholdings. Lee Kun-hee is unlikely to attend the case at the Seoul Central District Court.

There's little chance of Lee losing control of Samsung, but the legal wrangling over a small part of the Samsung fortune - a day after the enthusiastic launch of Samsung's latest Galaxy S3 smartphone - may dent plans to eventually hand over the reins to his only son, Jay Lee.

The hearing may also shed more light on how the Lee family maintains its grip on a sprawling group, some details of which emerged in a 2008 lawsuit when Kun-hee was found guilty of financial wrongdoing and tax evasion that eventually led to the current suit.

"It's generally not in one's favor to bet against the House of Samsung and the chairman for domestic legal issues - where such influence often transcends economic borders into legal ones," said Jasper Kim, a professor of international business law and finance at Ewha University's graduate school.

In an unusually public spat at the top of one of the country's famed chaebol - the family-owned industrial groups that wield huge economic and political clout - Maeng-hee, who is in his 80s, has called his younger septuagenarian brother "greedy" and "childish". Kun-hee retorts that Maeng-hee was turfed out of the family and not judged fit to lead Samsung by their father Lee Byung-chull, who founded the group in 1938.

EVER EVERLAND

The Samsung Group is effectively controlled by Samsung Everland, a small zoo and theme park company with equity capital of just $10.7 million.   Continued...

 
Samsung Electronics Chairman Lee Kun-hee meets with reporters after touring the Samsung booth at the 2012 International Consumer Electronics Show (CES) in Las Vegas, Nevada January 12, 2012. REUTERS/Steve Marcus