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Samsung touts 'best salesman' Lee's role in $6.6 billion Verizon deal as trial looms

Stock MarketsSep 10, 2020 11:20PM ET
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© Reuters. FILE PHOTO: Samsung Group heir Jay Y. Lee arrives for a court hearing to review a detention warrant request against him at the Seoul Central District Court in Seoul

By Joyce Lee and Hyunjoo Jin

SEOUL (Reuters) - As Samsung Electronics' (KS:005930) leader Jay Y. Lee readies for a new trial next month, the tech giant has quietly ramped up a public relations campaign touting Lee's deal-making expertise including in winning a $6.6 billion contract from Verizon (N:VZ).

Lauding the Samsung heir as 'the best salesman', the firm has over the past year released a flurry of statements and photos of his visits to its many business sites, showcasing a side of the normally-reserved Lee whose public image has taken a battering over a lengthy bribery scandal.

The mounting legal travails for Lee, which have cast a cloud over the leadership of one of the world's biggest tech companies, coincide with the reformist drive of President Moon Jae-in, elected three years ago after the impeachment and jailing of his predecessor Park Geun-hye.

Lee was indicted last week on suspicions of accounting fraud and stock price manipulation. A trial is scheduled to start on Oct. 22.

The stakes are high, and Samsung's public relations machine has stepped up a charm offensive, telling local media in a message this week that it expected cutting-edge network equipment business to grow into "the first flagship business of the Lee Jae-yong era," using the Vice Chairman of Samsung Electronics' Korean name.

According to the message seen by Reuters, Samsung said Lee actively engaged Verizon CEO Hans Vestberg on his visit to South Korea last year, and made several video calls with him ahead of clinching a $6.64 billion contract.

Samsung on Monday announced the contract to provide network equipment to Verizon in the United States, considered a major win as the firm seeks to narrow the gap in the 5G network market with frontrunner Huawei [HWT.UL], which is grappling with U.S. restrictions.

In a statement to Reuters, Samsung said: "Vice Chairman Jay Y. Lee has played a key role in developing new growth businesses and relationship with global clients and partners."

"The company responded to media requests and inquiries about his role and client relations," it added, saying that this "was part of normal communications with journalists."

In the message, Samsung also highlighted Lee's role in its 5G deal with Japan's KDDI (T:9433) last year despite the worsening bilateral relations.

"Samsung keeps exposing Lee to the media, to give the message that Lee plays a big role, so if he goes to jail or faces lengthy trials, this would disrupt management, put Samsung in difficulty, and Korean economy in difficulty," said Professor Park Sang-in of Seoul National University, a governance expert.

REPUTATIONAL DAMAGE

The fresh charges against Lee has further scarred the 52-year old Samsung scion's reputation and come at a time the world's biggest memory chip maker and No.2 smartphone manufacturer navigates intensifying competition and the coronavirus pandemic.

Lee is also facing a separate trial on charges of bribing former president Park in an influence-peddling scandal to take control of the business empire from his father, group patriarch Lee Kun-hee, who has been incapacitated since suffering a heart attack in 2014.

President Moon has pledged to curb the power of South Korea's chaebol, or family-owned conglomerates.

In the past, convicted business tycoons were shown leniency by courts for their economic contributions, but in a departure, Lee was jailed for nearly a year over the scandal involving Park.

Lee's father was convicted previously of breach of trust and tax evasion charges, but later received a presidential pardon.

In June, while refuting media reports on Lee's alleged wrongdoings, Samsung said such reports are "never desirable not only for Samsung’s future but the future of the Korean economy."

Samsung Electronics, the crown jewel in the Samsung group, reported annual revenue in 2019 equivalent to 12% of South Korea's economic output. A jump in chip exports helped slow the pace of decline in South Korean exports in the first 10 days of September, trade data showed on Friday. [L4N2G8052]

"Samsung's PR efforts seem to be to build Lee's good image," said Park Ju-gun, head of research firm CEO Score.

"If Lee cannot serve his role then it could adversely affect the economy, seems to be the nuance."

Samsung touts 'best salesman' Lee's role in $6.6 billion Verizon deal as trial looms
 

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