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The Samsung corruption scandal—an unrecognized cost

Tom Fox | February 27, 2017

One cannot say another company had a much worse year from the reputational and financial perspective than the Korean electronics giant Samsung. The Galaxy Note 7 cellphone disaster cost the company billions and set it back in its rivalry with Apple and the eponymous iPhone. Yet, the company had hoped that 2017 would have brought it some better news, if not less bad news. That optimism ended last week when the de facto leader of the company Lee Jae-yong was arrested in South Korea on charges of bribery, embezzlement, and perjury. Jae-yong is the vice chairman of Samsung Electronics, son of the current company head and grandson of the group’s founder.

Jae-yong thought he was off the hook from the bribery scandal surrounding the country’s current President, a court having declined prosecutors’ request for his detention. New and additional evidence, however, was presented by prosecutors and he was arrested. His arrest forestalled his formal takeover of the company...

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