The $370 Billion Family That Can’t Stay Out of Jail: The Lees of Samsung

Imagine your life at the very pinnacle of power and prestige in the lovingly innovative and forward-thinking culture of South Korea. Of course, we're not talking about strutting your dance moves as a member of legendary boy band BTS, or being an award-winning star in media properties like Squid Game or Best Picture winner Parasite. Although those would be nice. We're talking about a life as South Korean old money where you wake up and check your Samsung phone before heading downstairs to do your laundry in your Samsung washing machine. You turn on your Samsung TV to watch the news hosted in a skyscraper built by Samsung. You live and breathe in a world dominated by this brand. And with the way this company's grown over the last half century, even when you die, you'll be buried in a Samsung coffin. Better yet, we want you to imagine that you're the heir of this iconic global behemoth. The last place you'd want to, and expect to, end up is in a jail cell. And yet, that's exactly what happened along the way to the Lee family of South Korea's $370 billion empire. In today's episode, we'll share with you the full saga of the founding family of Samsung. From rags to riches, to jail to more riches, as we describe. The Lee family. The $370 billion family that owns South Korea. Lee Jae-yong, the suave executive chairman of Samsung, or Chaebol for those in the know, isn't just a business tycoon. He's a walking, talking emblem of Asian affluence. With a net worth bobbing around the $9 to $11 billion mark, Lee's not just rich, he's look up and see my bank balance in the stars rich. And his golden goose is, of course, a cozy 2% stake in Samsung as of January 2024. Not too shabby for a day's work. Now, looking to the luxurious life of this billionaire, Lee's not one to overtly flaunt his assets, but let's just say his entry into any room is nothing short of a red carpet affair. Private jets, limos with windows so tinted you'd think they lead to another universe, and suits so sharp they could probably cut glass. That's just a Tuesday for him. And when he's not making business moves, you'll find him perfecting his golf swing or trotting around equestrian stables. Because why not? Naturally, we can't forget his real estate game, which is as strong as the camera quality on the latest phones he makes billions from every day. In 2014, he casually dropped a cool $45 million on a Madison Avenue pad in New York. Add to that properties in London and Seoul, and you've got yourself a global monopoly board. But wait, there's his sister, Lee Boo Jin, sitting pretty with a net worth of $3.7 billion as well. Indeed, she's not just one of the country's richest women, she's a diamond-encrusted powerhouse in her own right. Her rise to riches was punctuated by a journey through the Samsung empire, climbing the ladder all the way to the top at Hotel Shilla, and her lifestyle is equal to Lee Jae Yong's luxury level. But then, add a sprinkle of extra extravagance. She's seldom seen without a Bulgari watch that's worth more than most people's homes, and her art collection is diversified as the electronics division in her family's very own multi-billion dollar empire. Therefore, from the outside, the Samsung family is the very definition of luxury, wealth and influence, and it's like they've got a VIP pass to life itself. But how did this empire sprout from the ground? To understand the roots of this opulent family tree, we need to time travel back to the dawn of the common era, where a legendary story of astronomical wealth begins. In the intricate landscape of South Korean history, the Lee family name, or Yi in its original form, emerges as a significant pillar. Tracing its origins to the Gyeongju clan, which was established at the dawn of the common era, the clan system in South Korea presents a fascinating study. Unlike the Scottish clans, known for their tartan-clad warriors and rugged highland territories, or the intricate tribal systems of Japan, marked by their strict social hierarchies and samurai codes, the Korean clan system is distinguished by its unique combination of ancestral reverence, regional ties and social stratification. And the Gyeongju clan, from which Samsung's Lee family descends, boasts a staggering membership of over 1.4 million individuals. And King Yuri, around the year 9 CE, marked a pivotal moment in this clan's history by conferring the name Yi upon his subjects, a name that, through centuries, has evolved into Lee in modern translation. Thus, the Lee surname, riding the waves of time, has become one of the most prevalent in South Korea, only surpassed by one other in terms of popularity. Therefore, outside of the Samsung founders in Korean history, we can find many notable figures hailing from the Gyeongju clan. These luminaries have painted various sectors with their brilliance, from arts to politics, adding layers of richness to the family's legacy. However, the story of Lee Byung-chul, the founding father of Samsung, adds a particularly golden hue to this already impressive lineage. Born not into the struggles of poverty, but into the comforts of substantial wealth, his story begins in the South Gyeongsang province of the then Korean Empire. Indeed, we can picture the South Gyeongsang province at the turn of the century, a period marked by the ebb and flow of traditional Korean culture and the impending tides of modernization. Certainly, it was an era when Korea stood at the crossroads of its own deep-rooted heritage and the looming shadows of external influences. In this historical juncture, in February 1910, Byung-chul entered the world as the youngest of four siblings, destined to leave an indelible mark on the business world. From a tender age, education was the beacon that guided Byung-chul's early journey. His academic voyage began at Jungdong High School in Seoul and later led him to the shores of Tokyo, where he enrolled at Waseda University. However, the halls of academia could not contain his burgeoning entrepreneurial spirit for long. Byung-chul soon realized that his true calling lay not in the pursuit of scholarly accolades, but in the vibrant arena of business. With a decision that would set the stage for a remarkable career, Byung-chul turned his back on Waseda University, choosing instead to carve his own path in the world of commerce. Thus, with the boldness of a pioneer and the legacy of centuries coursing through his veins, the entrepreneurial chapter of Lee Byung-chul's life commenced. In 1938, a pivotal year in South Korea's commercial saga, Lee Byung-chul embarked on a venture that would redefine the business landscape of the nation. Founding the Samsung Trading Company in Busan on the 1st of March, he ventured into a domain that was both challenging and promising. Now, the 30s and 40s in South Korea were periods rife with economic transformations. The country, still grappling with the vestiges of Japanese occupation and the stirrings of modern industry, presented a fertile ground for businesses that could bridge the gap between traditional commerce and the emerging demands of a modernizing society. In this context, a grocery transportation company seemed a strategic choice for Byung-chul, catering to the essential needs of a population on the cusp of change. Now, with an initial investment of 30,000 won, roughly equivalent to 25 dollars, Byung-chul demonstrated his business acumen in an era when such a sum represented a significant financial commitment. And his approach to growing Samsung Trading Co. was a masterclass in entrepreneurial agility and foresight. In a span of just seven years, he transformed the company from a modest operation into a significant player in the national market. This rapid expansion can be attributed to his keen understanding of the evolving Korean market, his ability to forge pivotal business relationships, and a relentless pursuit of diversification and innovation in business practices. By 1945, Samsung Trading Co. had expanded its operations across the country, becoming a prominent name in the transportation of produce. This success prompted Byung-chul to relocate to Seoul in 1947, seeking new horizons in the nation's capital. However, in 1950, the burgeoning trajectory of Samsung and the fate of South Korea took a dramatic turn with the outbreak of the Korean War. The conflict, rooted in the deep-seated ideological divide between the communist North and the capitalist South, escalated following the North's invasion of the South. And this geopolitical upheaval was a stark manifestation of the Cold War tensions, fracturing the Korean Peninsula and its people. Consequently forced to move back to Busan due to the conflict, Byung-chul faced a daunting challenge. Yet, in the turmoil of war, he discovered unexpected opportunities. The influx of American soldiers, part of the United States' effort to support South Korea against the North's aggression, created a new market dynamic, and the presence of these foreign troops, with their distinct needs and consumption patterns, opened new avenues for Samsung Trading Co. Byung-chul adeptly capitalized on this situation, adapting his business to cater to this new clientele. Therefore, the war years, while a period of great hardship for many, paradoxically proved to be a boon for Samsung Trading Co., as the company played a crucial role in meeting the increased demand for goods and services, thereby solidifying its position in the Korean economy. In the aftermath of the Korean War, Lee Byung-chul, with visionary zeal, steered Samsung into the realm of textiles, recognizing the pivotal role this sector could play in Korea's economic resurgence. This strategic expansion marked the beginning of a phenomenal growth trajectory for Samsung, transforming it from a national contender into a global powerhouse. And the 1960s heralded a period of diversification and acquisition under Byung-chul's leadership. His astute business strategies led to the acquisition of multiple insurance companies, a department store, an oil refinery, and a nylon company. Subsequently, this period of aggressive expansion underlined Samsung's ambition to become a conglomerate with a varied portfolio, a goal that was rapidly becoming a reality. Then 1969 was a watershed year for Samsung as it ventured into the electronics industry. The establishment of its first electronic divisions and the subsequent production of black and white televisions marked Samsung's foray into what would become its flagship sector. And the success was immediate and staggering. Samsung soon became the world's largest producer of black and white televisions. Concurrently, other subsidiaries began to manufacture home appliances, which quickly garnered acclaim within Korea for their quality and innovation. Furthermore, during this era of expansion and success, Byung-chul's son, Lee Kun-hee, started to show a keen interest in the family business. Fresh from his studies at George Washington University, Kun-hee was groomed by his father, learning the intricate realities of steering a company as dynamic and successful as Samsung. Then the 1980s saw Byung-chul relentlessly driving Samsung's evolution into a technological titan. Under his guidance, the company branched out into semiconductors, electronics, aerospace, and in 1985, the establishment of Samsung data systems marked its entry into the information technology sector. These bold moves laid the groundwork for Samsung's future as a global leader in technology and innovation. But then, in 1987, the visionary founder of Samsung, Lee Byung-chul, passed away at the age of 77. At the time of his passing, his estimated net worth was around 35 million US dollars, equal to roughly 94 million today, standing as a symbol of his extraordinary ability to turn a modest investment into a multi-million dollar empire. But Byung-chul's legacy extends far beyond his personal wealth. He was instrumental in the rebirth and growth of Korea's post-war economy, playing a crucial role in the nation's industrial and technological advancements. His life's work, Samsung, not only revolutionized business practices in Korea, but also set new benchmarks in global corporate leadership. However, in order to enter into truly old money territory, the Lee family would need their second generation of heirs to not only match daddy's performance, but actually outdo the patriarch. Let's see in the next chapter of They Succeeded. In the wake of Lee Byung-chul's passing, a significant restructuring took place within the Samsung empire, and the conglomerate was divided into five distinct entities, reflecting a strategic decision to diversify and specialize. First, Lee Kun-hee, Byung-chul's son, assumed control of Samsung Electronics, a move that would herald a new era for the company. His siblings, meanwhile, took charge of the remaining divisions, each carving their own path in the expansive Samsung landscape. And under Lee Kun-hee's stewardship, Samsung Electronics was poised for a transformation. Kun-hee perceived the company, as it stood, to be in a state of stagnation, a stark contrast to its dynamic and innovative beginnings. And this perception was not without basis. Despite its size and reach, Samsung had become mired in a comfort zone, with its strategies and products reflecting a reluctance to venture beyond familiar territories and challenge existing paradigms. Thus, determined to elevate Samsung Electronics to a global stature, Lee Kun-hee embarked on a radical overhaul. He identified a core issue, a cultural inertia within Korean corporate society To break this mold, Kun-hee introduced a new management philosophy, encouraging open dialogue, critical thinking, and a departure from the hierarchical norms that stifled creativity and risk-taking. Furthermore, Kun-hee's emphasis on quality over quantity marked a significant shift from the prevailing industry norms. Rather than churning out a plethora of products, he focused on refining a select few, ensuring they surpassed international standards. This strategy was thus not just about competing, it was about setting new benchmarks in quality and innovation. Therefore, the late 80s and 90s saw Samsung Electronics expand its footprint globally, with new manufacturing plants sprouting from England to Texas. This expansion was complemented by a foray into diverse technological ventures, including automobile manufacturing and the acquisition of international companies like Lux and Reli. Soon, Kun-hee's aggressive expansion tactics bore fruit. By 1995, Samsung Electronics' revenue soared to $87 billion, accounting for a significant portion of South Korea's GDP. Yet, success often walks hand-in-hand with controversy. In 1996, Lee Kun-hee's leadership came under scrutiny following allegations of political bribery linked to then-president Roh Tae-woo. Accused of engaging in corrupt practices, Kun-hee faced a two-year prison sentence. However, the sentence was initially suspended and subsequently, Kun-hee received a political pardon from President Kim Jong-sam. But this episode, while a blemish on his career, did not detract from the monumental impact Lee Kun-hee had on transforming Samsung Electronics, and by extension, South Korea's presence in the global technological arena. His vision and relentless pursuit of excellence propelled Samsung into an era of unprecedented growth and innovation, firmly establishing it as a titan in the global market. Next, during the next decades, Samsung not only weathered the storm of the Asian financial crisis, but also emerged as a leader in the global technology market. The crisis, which swept through Asia from July 1997 to December 1998, tested the mettle of many Asian conglomerates. Samsung, under Kun-hee's guidance, navigated these turbulent times with strategic foresight, strengthening its position in the global economy. And a key milestone in Samsung's journey was the launch of the first Galaxy smartphone in the early 2000s. This product swiftly gained acclaim worldwide, catapulting Samsung into a major player in the smartphone market. In parallel, 2006 marked another triumph for the company as it ascended to the position of the top-selling television manufacturer. These successes were emblematic of Samsung's growing dominance and its ability to innovate and adapt to changing market dynamics. However, the sheen of these achievements was dulled in 2008 when Lee Kun-hee again faced serious legal challenges. He was found guilty of tax evasion, a charge that led to fines exceeding $80 million and a three-year prison sentence. Similar to the past, Kun-hee was pardoned, reflecting a complex interplay of business, politics, and law in South Korea. This legal debacle resulted in Kun-hee temporarily stepping down as chairman of Samsung Electronics in 2008. But Kun-hee's hiatus from the helm of Samsung was short-lived. He returned to the leadership position in 2010, demonstrating his obsessive commitment to the company's growth and innovation. Under his renewed leadership, Samsung continued to expand its technological footprint, delving into new products such as tablets and smartwatches. However, in 2014, Lee Kun-hee's health took a turn for the worse when he suffered a heart attack, leading him to step down from his active leadership role. He retained the title of chairman, but passed the baton of day-to-day management to his son, Lee Jae-yong, who took on the role of de facto director. This transition marked a new chapter in Samsung's history, one that would be navigated by the now third generation of the iconic Lee family. Unfortunately, rather than writing the family ship back on course in the legal realm, more criminal trouble would soon be afoot for the Lees. Lee Jae-yong's tenure at the helm of Samsung has been mired in legal controversies, casting a shadow over the tech giant's impressive achievements, and the most significant of these controversies erupted in 2017, revealing a tangled web of bribery and corruption. Central to this scandal was the revelation that Lee Jae-yong had bribed South Korea's former president, Park Geun-hee. Among various illicit transactions, the most striking, perhaps, was the embezzlement of company funds to purchase an $800,000 horse for Park's daughter. Lee Jae-yong initially served a year of his prison sentence before it was suspended. However, this respite was short-lived as, in January 2021, his sentence was reinstated, leading to another six months behind bars before he was granted a presidential pardon. Shockingly, the legal woes for Lee Jae-yong did not end there. In the same year, he faced conviction and a fine of $59,000 for using the illegal sedative Propofol. His defense, citing stress relief, failed to sway the court's judgment. Furthermore, allegations surfaced in 2023, linking Lee to a $3.9 billion accounting fraud scandal dating back to 2015, with prosecutors accusing him of manipulating stock prices of two Samsung subsidiaries, a move aimed at consolidating his control over the conglomerate. While prosecutors sought a five-year imprisonment, the outcome of this case remained pending at the time of this report. Despite these tumultuous legal challenges, Samsung Electronics' business performance has remained robust. In the third quarter of 2023, the company held a significant 19.4% market share in the smartphone industry, trailing only behind Apple. Moreover, Samsung has laid out ambitious plans for the future, focusing on integrating advanced AI models into its upcoming generations of smartphones and electronics. Lee Jae-yong continues to steer Samsung, even as he faces the possibility of further jail time, and this juxtaposition of business success and personal legal strife paints a complex picture of the Samsung dynasty. On the surface, the company's achievements and market dominance depict a tale of triumph and innovation. However, a deeper examination reveals a less pristine narrative, marked by legal entanglements and ethical questions, much like almost any old money family we've investigated on this channel. And now we'd like to see you in the comments. Which East Asian old money family would you like us to feature next? We love hearing your thoughts as we expand our coverage to other parts of the world outside of the West. We'll see you below, and thanks again for joining us for another episode of Old Money Luxury. Cheers, until next time.