Samsung to freeze executives' wages amid challenges

Samsung chief wins inheritance suit against brother in appeals

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Published : 2014-02-06 10:57
Updated : 2014-02-06 14:55




Samsung Electronics Co. Chairman Lee Kun-hee won an inheritance case at a Seoul appeals court Thursday against his estranged brother demanding 940 billion won ($850 million) in stakes in the group's units.

Upholding a lower court decision allowing Lee to keep his holdings in the group's key subsidiaries, the Seoul High Court ruled against the chairman's eldest brother, Lee Maeng-hee.

With the ruling, the country's richest man was able to keep his holdings in the companies, including Samsung Life Insurance Co. and Samsung Electronics that the brother claimed were hidden from him after the death of their father, Samsung founder Lee Byung-chull.

The court said that some of the stocks demanded by the brother were actually left to him by their late father, but the 10-year period for inheritance claims had already expired. Other stocks could not be viewed as part of their inheritance, the court added.

Lee Maeng-hee, who virtually controls food and media conglomerate CJ Group, first launched the suit in 2012, accusing the chairman of secretly taking ownership of the stocks that their father left in a trust under a third person's name before his death.

It later became 4.08 trillion won in civil suits with the participation of an elder sister, Lee Sook-hee, and the family of the founder's deceased son.

The high-stakes legal fight highlighted a deep discord between the brothers, who denounced each other in public as the battle unfolded.

The other siblings, who had participated in the civil suits, did not file for appeals following their loss at the Seoul Central District Court in January 2013.

The elder Lee also trimmed down the damage claims from 4 trillion won to 940 billion won, saying that he wants to reconcile with the chairman.

The Samsung owner did not accept the gesture, saying that his elder brother became covetous as Samsung emerged as a global industrial behemoth.

The late Lee, who founded Samsung in 1938, had eight children and left the majority of his wealth to the Samsung Electronics chairman, his second living son, when he died in 1987.

The ruling was closely watched as the verdict against Lee could have resulted in influencing a cross-shareholding structure of the country's largest conglomerate. The entangled cross-share ownership structure allows a handful of people with small stakes to control the decision-making process of all of their subsidiaries.

Samsung Group is well known for its complicated governance structure that involves affiliates Samsung Card, Samsung Everland, Samsung Life Insurance and Samsung Electronics.

In 2012, Lee promoted his only son Lee Jae-yong to vice chairman of Samsung Electronics, putting the 45-year-old closer to the top leadership position of the world's largest manufacturer of memory chips, smartphones and TVs.

Following the verdict, a lawyer representing Lee Maeng-hee, who had spent nearly 17 billion won on the lawsuit, said he will consult with his client before deciding whether to file an appeals with the nation's top court. (Yonhap News)

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