The Korea Herald


Drug probe on heir puts brakes on CJ Group succession

By Cho Chung-un

Published : Sept. 2, 2019 - 17:42

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The only son of CJ Group Chairman Lee Jay-hyun is under investigation on charges of smuggling liquid marijuana, putting the brakes on the food-to-entertainment giant’s succession plan.

Lee Sun-ho, the heir-in-waiting of CJ Group, the 14th-largest conglomerate here, was allegedly caught by the customs service at Incheon Airport on Sunday attempting to smuggle liquid marijuana in cartridges into the country. The case was transferred to the Incheon District Prosecutors Office, authorities said. 

(Yonhap) (Yonhap)

The 28-year-old heir and great-grandson of Samsung founder and late Chairman Lee Byeong-chul is currently a senior manager at CJ Cheiljedang, the food and bio unit of the group. He is accused of hiding several dozen marijuana cartridges in his luggage and carrying them in from the United States. Possession and attempted smuggling of drugs can incur heavy penalties under Korean law.

Lee is under investigation on suspicion of violating the Narcotics Control Act, prosecutors said. He also tested positive for the illegal substance through a urine test, according to the prosecution.

The liquid-type marijuana cartridge was the same type of drug found to have previously been illegally possessed by other chaebol scions. At separate trials, the prosecution demanded 1 1/2 years in prison for the third-generation chaebol scions from SK and Hyundai Group, also accused of possessing marijuana.

CJ Group, meanwhile, declined to comment on Lee, saying it was still discussing how to deal with the personal matter.

Lee Sun-ho (CJ Group) Lee Sun-ho (CJ Group)

The possibility of Lee serving prison time is low, as he would be a first-time offender. But the case will clearly mark a blemish on his reputation as the heir to the group, formerly a part of the Samsung empire, according to industry insiders. It might also change the chairman’s mind about passing down leadership to his son. The chairman has a daughter, Lee Kyung-whoo, who serves as a senior executive at CJ E&M.

The group has reportedly been speeding up the succession process, in light of the chairman’s deteriorating health.

Chairman Lee returned to management after a presidential pardon granted by former President Park Geun-hye in 2016, but he suffers from Charcot-Marie-Tooth disease, an inherited neurological disorder.

Signaling an attempt to speed up the succession scenario, CJ reorganized its governance system in April, which helped Sun-ho to secure 2.8 percent of shares in CJ Corp., the holding company of the group. It has been said that the group is working to secure cash to pay taxes to inherit his father’s controlling stake of 42.07 percent in CJ Corp.

Sun-ho is the second-largest holder of CJ Olive Networks, an online retail arm of the group, with a 17.97 percent stake, while his elder sister Kyung-whoo holds 6.91 percent. He also holds a 0.68 percent stake in CJ E&M while his sister holds 1.2 percent of shares in CJ Corp. and minor stakes in various units including CJ CheilJedang and CJ E&M.

CJ has been eyeing a list of merger and acquisition opportunities, with an aim to generate 100 trillion won ($83 billion) in sales by 2020. It also hopes to generate 70 percent of its sales from overseas markets. But the group has been losing momentum due to Lee’s prolonged absence over his illness and trials that started in 2013.

By Cho Chung-un (