The family of late Samsung patriarch Lee Kun-hee has pledged billions of dollars in healthcare spending and art donations and vowed to pay $11bn in one of the world’s biggest-ever inheritance tax bills.
Following Lee’s death in October, South Korea’s most powerful family was given six months to inform tax officials of how they would deal with the estate of the country’s wealthiest man, including a 60 per cent inheritance tax bill on his $20bn fortune.
In a rare public statement, the family on Wednesday announced a suite of philanthropic donations, including hundreds of millions of dollars for child cancer treatment, an infectious diseases hospital and vaccine research.
The family will also donate Lee’s cache of 23,000 artworks and antiques to South Korean museums. The personal collection includes masterpieces by Salvador Dalí, Claude Monet and Pablo Picasso as well as celebrated Korean artists such as Park Soo-keun, Lee Jung-seop and Kim Whan-ki.
The Samsung group, which started life trading dried fish and vegetables in the 1930s when Japan ruled the Korean peninsula, is one of the world’s top producers of computer chips and smartphones among countless electronic devices and components.
Lee was the second-generation Samsung chair who steered the company’s sweeping transformation into a global technology powerhouse.
The donations, the family said, will “uphold his legacy and contribute to the creation of a better society”.
The family also vowed to pay in full the more than Won12tn ($11bn) in taxes related to the inheritance. The taxes will be paid in six instalments over a period of five years, they said.
“It is our civic duty and responsibility to pay all taxes,” they said, noting also that “the inheritance tax payment is one of the largest ever in Korea and globally, equivalent to three to four times the [South Korean] government’s total estate tax revenue last year”.
No further details were provided.
The family’s public image has been clouded by the jailing in January of Lee Jae-yong, the late chair’s son who heads Samsung, for bribery linked to his succession.
According to local analysts and people familiar with the situation, the family planned to foot most of the bill initially through bank loans backed by their own shareholdings as well as cash from higher dividend payouts from Samsung group units. Lee Kun-hee’s estate includes shareholdings in Samsung Electronics as well as smaller businesses such as Samsung Life Insurance and Samsung C&T.
Park Sang-in, an economics professor at Seoul National University, said the family did not appear to have reached an agreement on how to divide the inherited stockholdings because of Lee Jae-yong’s imprisonment.
Analysts have not ruled out that the Lee family might have to divest some of their holdings in Samsung companies, a prospect that could present rare opportunities for outsiders to snatch toeholds in the conglomerate.
However, control of Samsung Electronics, the crown jewel of the family’s business empire, is expected to remain with Lee Jae-yong.
“There will be no big trouble in paying the bill in instalments. They can increase dividend payouts from Samsung companies, take out bank loans with their stockholdings as collateral and sell some stakes in minor companies, which won’t affect their grip over major units,” said the head of a local brokerage who asked not to be named.
The wealth and power of South Korea’s chaebol families remain divisive on the streets of Seoul.
Chun Young-tae, a real estate agent, viewed the Lee’s donations as “a ploy” to improve the family’s image. “The Lee family has transferred Samsung’s management control to the third generation in many illicit ways,” he said.
However, BK Park, an electrician, said it was “good to see” the family increase its social contributions as part of the succession process.
“I am not against pardoning Lee Jae-yong because I think he may have something to contribute as the leader of Samsung, in this health and economic crisis,” Park said.
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