Tax Evasion Rap Compels Samsung Chair to Quit Post

The move, announced to reporters by Lee himself, was both welcomed as a possible sign of more openness at the troubled business group, but also as a cause for worry that Lee's absence may harm South Korea's economy.

The 66-year-old Lee, with about 30 Samsung executives standing nearby, apologized for "troubles to the nation" over an independent counsel investigation into the conglomerate's operations that resulted in the indictment of himself and other Samsung executives last week.

Until recent weeks, South Korean were unaccustomed to hearing much publicly from Lee, who has been described as a loner with a fascination for gadgets and how they work. During the independent counsel investigation, however, Lee spoke to reporters after undergoing hours of questioning twice in a week -- and even hinted he might resign.

Fifth of SK's Exports

Lee took over the reins of Samsung two decades ago following the death of his father, the conglomerate's founder. He is one of South Korea's richest people, is widely regarded as its most influential business executive and serves on the International Olympic Committee.

Samsung Group has interests in dozens of businesses including electronics, shipbuilding and construction. Its companies account for up to 20 percent of South Korea's exports, by some estimates.

Samsung Electronics, its flagship corporation, is a world leader in computer chips , flat-screen TVs and mobile phones. Lee is widely seen as the driving force behind its rise into a global technology force.

Slush Fund Allegations Dropped

Special prosecutors Thursday indicted Lee on charges of evading 112.8 billion won (US$113 million) in taxes, ending a three-month probe in the family-run conglomerate prompted by allegations of wrongdoing by a former Samsung lawyer.

Prosecutors, however, dismissed the most explosive claim -- that Samsung used affiliates to raise a slush fund to bribe influential South Koreans -- for lack of evidence.

They also decided to indict Lee without arrest, saying his apprehension was too big a risk for South Korea, citing "the extremely competitive global economic situation."

Nine other Samsung executives were also indicted on various charges.

Other Resignations

After Lee spoke, Vice Chairman Lee Hak-soo, considered the chairman's closest confidante, also announced his resignation as well as that of Lee Jae-yong, the chairman's son and heir who is an executive at Samsung Electronics.

Samsung also said that it would eliminate its Strategic Planning Office, long a lightning rod for critics of its management structure.

Samsung also said Lee would pay the taxes he is accused of evading and that $4.5 trillion of won ($4.5 billion) of his assets special investigators discovered in stock and bank accounts would not be used by Lee personally.

Economic Impact

Reaction to Lee's departure was mixed.

"I think it will have a positive impact in the long-run because it shows that the chairman is accepting responsibility, which ultimately means accountability," said Kim Joongi, a professor of law at Seoul's Yonsei University.

"And I think that's what's most needed for our largest conglomerates," added Kim, who has pushed for better management practices at Samsung and other conglomerates.

Some South Koreans, however, fretted over what Lee's departure could mean for a country where Samsung Group companies account for as much as one-fifth of the country's exports.

"I'm worried that the Korean economy would negatively be impacted by Chairman Lee's resignation," said Kim Kyung-wook, a salesman at a shipping company.

It was not immediately clear if the post of chairman would remain vacant or eventually be filled, but the group said that Lee Soo-bin, chairman of Samsung Life Insurance, would be representing Samsung Group "externally."

Shares in Samsung Electronics gained 0.2 percent to 675,000 won ($675) while shares in some other group companies fell.