JY's Agony Before Standing Alone... Revealed After 7 Years

Samsung Electronics Vice Chairman Lee Jae-yong's Trial Reveals Former Goldman Sachs Chairman's Email for the First Time

Samsung Electronics Vice Chairman Lee Jae-yong is heading to the courtroom as he attends a trial held at the Seoul Central District Court in Seocho-gu, Seoul on the 11th.
[Image source=Yonhap News]

[Asia Economy Reporter Kim Heung-soon] "There is still work to be done to focus on our core businesses. Shareholders and others will eventually recognize our efforts to make the ownership structure more transparent."

Seven years ago, when the late Samsung Chairman Lee Kun-hee was bedridden, traces of Samsung Electronics Vice Chairman Lee Jae-yong's contemplation on the company's core business strategy and management direction were revealed late through records from those who met him. At that time, Vice Chairman Lee shared his thoughts on Samsung Electronics' current and future businesses, including smartphones, semiconductors, and software, which have since been implemented as concrete plans over the years, drawing attention.

Contemplating Management Direction During Late Chairman Lee Kun-hee's Illness
Shared Business Plans and Sought Advice

According to the legal and business circles on the 12th, an English email was disclosed near the end of the trial held at the Seoul Central District Court the previous day regarding Vice Chairman Lee's alleged violations of the Capital Markets Act and the Financial Investment Services and Capital Markets Act (unfair merger of Samsung C&T and Cheil Industries and accounting fraud allegations against Samsung BioLogics).

The email, submitted as evidence by Vice Chairman Lee's defense attorney, was sent on December 8, 2014, by Jim Sykes, then Co-Head of Mergers & Acquisitions at Goldman Sachs in the U.S., to three people including Jung Hyung-jin, then head of Goldman Sachs Korea, who appeared as a witness in the trial that day. Sykes is known in the global investment banking (IB) industry as an expert in IT and telecommunications. He is famous as the banker who handled Apple and Steve Jobs in the U.S. It is also reported that Steve Jobs introduced him to Vice Chairman Lee.

In the email, Sykes wrote, "Jay (Lee Jae-yong) came to see me today," and detailed their conversation. He said they mostly talked about Samsung Electronics' overall business. Specifically, they focused on product differentiation in hardware aspects such as high-performance components, displays, form factors, and camera technology; non-memory business strategies including system semiconductors and foundry; increased investment in software; and maintaining continuous supply relationships with Apple.

These plans of Vice Chairman Lee have taken shape over the past seven years. A representative example is Samsung's Galaxy smartphone, which struggled after the advent of the iPhone but recently led a new trend in form factors with its foldable phone. The declaration of the 'System Semiconductor Vision 2030,' aiming to invest 171 trillion won by 2030 to become the world’s number one in system semiconductors, strategies for software development such as artificial intelligence (AI) and the Internet of Things (IoT), and supplying key components to Apple are also businesses that have been implemented or are underway.

Employees are coming and going at Samsung Electronics Seocho Building. Photo by Moon Honam munonam@

"Discussions on Management Succession Lack Persuasiveness"

Vice Chairman Lee also repeatedly emphasized Samsung's 'selection and concentration' management strategy, which has been upheld since Chairman Lee Kun-hee's era, during his meeting with Sykes. He mentioned the ongoing efforts to divest non-core businesses such as defense and chemicals, saying, "Because of the hard work on this, Korean politicians and others do not seem to like me very much." Nevertheless, he stressed the necessity of focusing on core businesses and transparently restructuring the ownership structure at this point.

Sykes also wrote in the email that "(Vice Chairman Lee) said he is well prepared to deal with inheritance tax issues." Although it was only seven months since Chairman Lee Kun-hee had collapsed, their conversation suggests that the inheritance tax issue was largely resolved and not a major concern.

The defense attorney’s disclosure of the email was also intended to support the claim that Vice Chairman Lee met with Goldman Sachs personnel not for management succession or restructuring of the governance structure as alleged by the prosecution, but to seek advice on overall business issues and future strategies.

Some in the legal community argue, "Considering the content of the conversation in the email, the prosecution’s claim in the indictment that Vice Chairman Lee repeatedly contacted Goldman Sachs to discuss selling Samsung Life Insurance shares to raise inheritance tax funds lacks persuasiveness."

This content was produced with the assistance of AI translation services.