Former Samsung chairman facing jail

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The former chairman of Samsung should be jailed for seven years, prosecutors in South Korea have told local media.

Lee Kun-hee resigned as chairman and chief executive in April 2008 following a government investigation into allegations of bribery and financial misdeeds.

Along with other former senior Samsung executives, Lee faces charges including breach of trust and tax evasion.

Samsung is among the largest global manufacturers of hi-tech products such as memory chips, mobile phones and LCD screens.

The group has annual revenues in excess of US$150bn. First-quarter net profits at key group member Samsung Electronics rose 37 per cent to US$2.2bn.

Lee, the son of the company's founder, began running Samsung 20 years ago and presided over a period of unprecedented growth.

When Lee was originally indicted, prosecutors declined to detain him, warning that this could have a negative effect on the country's economy.

Samsung's Byzantine corporate structure is apparently at the centre of its latest woes. A dizzying array of cross-holdings concentrates control in the hands of the founding family, despite huge outside investment.

Lee himself owns only 1.9 per cent of Samsung Electronics, for example.

Problems worsened for Samsung late last year when a former legal executive alleged that the company had used a secret US$205m fund to bribe officials and journalists.

Prosecutors later admitted that they had found no evidence of bribery, but the investigation drew attention to other irregularities.

Lee was convicted in the mid-1990s of giving bribes to two of South Korea's former presidents, but received a presidential pardon and returned to run the company.

Prosecutors have alleged that some of Samsung's financial manoeuvring was part of a plan to pass control of Samsung to Lee's 40 year-old son Lee Jae-yong, who has subsequently resigned from his senior position at Samsung Electronics.
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