'Parolee Lee Jae-yong' Faces Restrictions on Business Activities... Ministry of Justice Approval Required for Every Overseas Business Trip

Return as an Unregistered Executive Expected
Likely to Focus on M&A and Current Issues Rather Than Full Management Role

[Asia Economy Reporter Su-yeon Woo] Samsung Electronics Vice Chairman Lee Jae-yong has been released on parole, but there is still a long way to go before a full return to management. Since he is conditionally released before the completion of his sentence, he must undergo probation supervised by the Ministry of Justice. He must report to the Ministry of Justice and obtain approval for every overseas business trip, and the appointment as a registered executive also requires the Ministry of Justice's permission. Accordingly, Vice Chairman Lee is expected to return to the management field as an unregistered executive and attend to urgent issues first.

There is also keen interest in what steps Vice Chairman Lee will take first after his release. After being sentenced to probation in February 2018 and released, he immediately visited the late Samsung Chairman Lee Kun-hee, who was bedridden, to pay a hospital visit. It is anticipated that after this release, he will first visit and pay respects at his family’s ancestral graves in Suwon, Gyeonggi Province.

Lee Jae-yong, Vice Chairman of Samsung Electronics

From the perspective of management activities, it seems difficult for him to directly inspect overseas sites or take an active role in frontline management to deliver strong messages. This is because parole status imposes various restrictions on his movements, unlike a pardon which exempts the execution of the sentence and nullifies the effect of the guilty verdict. The continuous calls for a pardon despite the parole decision for Vice Chairman Lee stem from this background. The business community expects that rather than immediately taking the lead in management, he will focus on deciding major issues such as mergers and acquisitions (M&A) or investments and devote himself to future management plans.

The Korea Chamber of Commerce and Industry stated, "It is regrettable that Vice Chairman Lee is returning to management through parole rather than a pardon," and added, "We hope that related government departments will apply regulations on management activities flexibly, such as meetings with overseas partners and visits to global production sites." The Korea Employers Federation also emphasized, "Parole imposes various restrictions on management activities, so maximum administrative consideration is needed to allow Vice Chairman Lee to fully concentrate on management activities in the future."

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