For the mighty Samsung empire, things couldn’t be worse … or better. The venerable Lee Kun-Hee, the richest Korean by far, has been hospitalized for three years. His only son, Jay Y. Lee, 48, who had been running the group, is in jail facing bribery and embezzlement charges (he denies all wrongdoing). But led by its seemingly unstoppable flagship, Samsung Electronics, the group is riding high. With an estimated first-quarter operating profit of $8.7 billion, up 48% from a year earlier, Samsung Electronics shares have gained 60% over the past year. Last month Samsung introduced the Galaxy S8–an answer to the embarrassing failure of the fire-prone Note7 last year.
While a battery of lawyers fought to defend Jay Y. in a packed Seoul courtroom, Koh Dong-Jin, Samsung Electronics’ president of mobile communications, heralded the wonders of the S8 before equally packed gatherings in New York and Seoul: “The Samsung Galaxy S8 and S8+ … are our testament to regaining your trust.” He did not need to mention the fiasco of the Note7, but the message was clear.
Did it matter that the Korean media regularly showed Jay Y., the Samsung Electronics vice chairman, with his wrists bound in ropes like a common criminal? Were investors concerned that both father and son, their caricatures on signs held aloft during marches, were the target of demonstrators calling for reform of the chaebols?
Hong Ra-Hee, 72, Samsung’s first lady, resigned in March as director of the Samsung Museum of Art, known as Leeum, and the Ho-Am Art Museum. Aides cite “personal reasons,” considering that her husband is bedridden and her son in jail.
Hong is an arts graduate of Seoul National University, and both museums contain collections from her father-in-law, Samsung founder Lee Byung-Chull. Leeum comes from Lee’s name and the last syllable of “museum”; Ho-Am, the patriarch’s pen name, means “lake rock,” for his breadth and strength. One of her brothers, Hong Seok-Hyun, published JoongAng Ilbo, a top daily newspaper, and now his son does. Another brother, Hong Seok-Joh, runs the country’s biggest convenience-store chain and ranks No. 22.
Lee Boo-Jin appears to live a charmed life as the country’s richest woman. She’s president and chief executive of Hotel Shilla, one of Seoul’s top lodging and conference centers, and a big shareholder in Samsung C&T, a holding company for the Samsung empire. But she’s in the middle of a messy divorce from Im Woo-Jae, who revealed this year that he was her bodyguard when they met and not a Samsung office employee, as the company had claimed.
Nevertheless, after he was forced to go to school in the U.S., he was made vice president of Samsung Electro-Mechanics. They’ve been separated for five years and have a 10-year-old son. Im has asked for $1.04 billion in the divorce settlement but is expected to receive much less.
The future of Samsung Electronics seemed to hang in the balance when the company was forced last September to recall the Galaxy Note7, at the time the latest, highly touted Samsung smartphone, after the batteries in some of the phones exploded and caught fire. Attempts at correcting the problem failed, and Samsung stopped production the next month. By January, Samsung had figured out what was wrong: Batteries made by two suppliers were positioned incorrectly, short-circuiting the phones.
The disaster cost Samsung many billions of dollars before it moved on to the Galaxy S8, which went on sale last month. Samsung reports that “the initial response has been very strong.”
For more coverage from South Korea’s Richest 2017, see stories below: