Samsung Electronics seems to be doing just fine without its boss, Lee Jae-yong, who faces charges that he bribed South Korean government officials. But if Lee goes to jail, it’s unclear whether Samsung’s managers can make the decisions needed to keep the company on the rise.
When Samsung Electronics became the world’s most profitable technology company last month, its de facto leader was in jail.
Lee Jae-yong, vice chairman and heir apparent to Samsung Group, faces charges that he bribed South Korean government officials to solidify his family’s control of one of the world’s biggest business empires. On Monday, prosecutors recommended that Lee should be sentenced to 12 years in prison.
Samsung, by contrast, appears to be doing just fine without its boss. The conglomerate’s electronics arm made $10 billion in profit last quarter, thanks in part to strong demand for its chips. Samsung has also begun to cast aside the cloud that fell over it last year when its Galaxy Note 7, a high-priced smartphone meant to challenge the Apple iPhone but which showed a proclivity to burst into flames, became one of the technology world’s most spectacular failures.
The question is how long Samsung can travel down both of these paths.
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Should Lee go to prison, or if his reputation is too badly damaged, experts say it remains unclear whether the cadre of professional managers that reports to the Lees can make the strategic decisions needed to keep Samsung on the rise.
“Samsung’s recent performance has little to do with senior management,” said Kim Woochan, a professor of finance at Korea University Business School in Seoul. “It’s riding on the coattails of a rebounding semiconductor industry.”
The trial of Lee, known as Jay Y. Lee in the West, wrapped up Monday, with prosecutors also seeking up to 10 years in prison for a group of other Samsung executives. A verdict in the case, which involves South Korea’s former president, Park Geun-hye, is expected in weeks.
Lee said that he committed no crime but that as a senior figure at Samsung, he felt “responsibility” for the scandal.
“I used to make a pledge to myself that when I am fully in charge of management, I would do things properly, abide by the law and do things right as well as become a businessman respected by society and people,” he said Monday. “I am filled with many emotions that I…