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3 Execs to Watch After Samsung Chief’s Arrest

Feb 16, 2017

A South Korean court on Friday ordered the arrest of Jay Y. Lee, the 48-year-old head of the Samsung Group, on suspicion of bribery and other charges in a corruption scandal that led parliament to impeach President Park Geun-hye.

Prosecutors accuse Lee in his capacity as head of South Korea's largest conglomerate, or chaebol, of pledging 43 billion won ($37.74 million) to a business and organizations backed by Park's friend, Choi Soon-sil, in exchange for support of a 2015 merger of two Samsung companies.

Samsung (ssnlf) and Lee have denied wrongdoing in the case. Park, whose impeachment will be upheld or overturned by the Constitutional Court, has also denied wrongdoing.

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Samsung watchers have said Lee's arrest would not affect the day-to-day running of group companies including Samsung Electronics, which are run by professional managers, but a prolonged absence could impact longer-term and strategic decision making.

Lee's arrest is likely to put greater public focus on three key executives at the sprawling conglomerate.

The Mentor

Choi Gee-sung, vice chairman, Samsung Electronics

Choi, 66, heads Samsung's group strategy office, dubbed the "control tower." Known to be Jay Y. Lee's mentor, Choi had been expected by group insiders to take charge of the conglomerate in the event of Lee's absence.

With more than three decades at Samsung, Choi has been deeply involved in preparing a plan for Jay Y. Lee to assume control of the group from his father, who was incapacitated by a 2014 heart attack.

Previously CEO of Samsung, Choi created the role of chief operating officer in 2010, and appointed Jay Y. Lee to that post.

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Mr. Chip

Kwon Oh-hyun, vice chairman and CEO, Samsung Electronics

The 64-year-old Kwon, who succeeded Choi as Samsung Electronics CEO in 2012, mainly oversees Samsung's cash-cow components business, which includes the world's biggest maker of memory chips, a key driver of revenue and profits.

Known as "Mr. Chip," the low-profile Kwon may find himself with a larger role as he guides Samsung through the aftermath of last year's crisis over exploding Galaxy Note 7 smartphones.

Samsung Group Chief Arrested in Impeachment Scandal Investigation

The Sister

Lee Boo-jin, CEO, Hotel Shilla Co Ltd

The elder of Jay Y. Lee's two younger sisters, 46-year-old Lee Boo-jin heads Samsung's Hotel Shilla arm, which is among the world's largest duty-free retailers. Shares in the company rallied earlier this week on market speculation that she would take a bigger role in the group if her brother was arrested.

Some group watchers dismissed that likelihood, noting that Lee Boo-jin does not have experience at the flagship Samsung or hold a significant stake in the company.

It is extremely rare in South Korea for a woman to assume control of a family conglomerate.

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