The Lee family (from Inheritance: Samsung): Part one

0:00This BBC podcast is supported by ads outside the UK.

0:30travel dollars work harder. Follow Smart Travel on your favorite podcast app. Ever invest in something that seemed incredible at first, but didn't live up to the hype? Like those$5 roses at a gas station, or a second-hand piece of technology that breaks in the first 10 minutes? Marketers know that feeling. We optimize for the numbers that look great, impressions, reach, and reacts. But when they don't show revenue, well, that's a not-so-great conversation with the CFO. LinkedIn has a word for that. Bull spend. Now you can invest in what looks good to your CFO. LinkedIn ads generates the highest ROAS of all major ad networks.

1:11You'll reach the right buyers because you can target by company, industry, job title, and more. So cut the bull spend. Advertise on LinkedIn, the network that works for you. Spend$250 on your first campaign on LinkedIn ads and get a 250 credit for the next one. Just go to linkedin.com slash broadcast. That's linkedin.com slash broadcast. Terms and conditions apply. Hi, good, bad billionaire listeners. It's Zing here. And Simon. And we'll be back in a few weeks time with even more billionaires to discuss and dissect. We're going to cover billionaires you may have heard of, Beyonce, Sir Paul McCartney, anyone?

1:53And some you might not know, like Tao Huabi, although you may have a jar of her crispy chilli oil in the fridge. And while we're working on new episodes, we wanted to bring you something a little bit different, but just as good. Coming up in a minute are the first three episodes of a fantastic new BBC podcast called Inheritance Samsung. We don't usually look at people who've inherited their billions on this podcast, but some of the biggest companies in the world and some of the most powerful business people on the planet are part of family-owned companies. I mean, there are pros and cons of these big family dynastic businesses.

2:27On the one hand, you get to make long term decisions. You're not buffeted by your outside owners. Shareholders can't get grumpy all the time because you and your family are the shareholders. But of course, that doesn't mean there aren't arguments. And it can be quite hard to keep those warring factions under control and in the best interest of what's going on. There are definite downsides because, let's face it, corporate betrayal stings a lot more when it's your brother or sister or parent doing the betraying. Yeah. And then you have that problem about succession, which they made a terrific TV series about.

3:01What happens if the person who's supposed to inherit the business isn't up to the job? I've seen this happen, actually, where, you know, the baton gets passed on from one generation to another. And everyone's wondering, can they do it? Are they a duffer? And what about all those loyal lieutenants to the parent? Are they as loyal to the offspring? And is that when trouble can start? There's a whole nest of things that can go right or go wrong. Well, it sounds like a very fertile starting point for a podcast. This series looks at Samsung specifically, which is the biggest company in South Korea.

3:36And Zing, what do you know about Samsung? All I know is that, you know, they make their phones. They've been around for decades. They're very successful. but I have to admit I don't know very much beyond that. They're the sort of corporate poster child for the economic and technological miracle of South Korea. Plenty to feast on. We hope you enjoy the first three episodes of Inheritance Samsung. To hear the full series, you can listen on BBC Sounds or if you're outside the UK, just search Inheritance Samsung wherever you get your podcasts.

4:09February 2017. Wintertime in South Korea. Bright sunshine, a chill breeze just above freezing. In central Seoul, a blue prison bus rolls to a stop. Peering out through its tinted windows, the accused man can see what is waiting for him. Police and photographers line the road. Protesters, too. In a moment, the doors will open, and he'll have to face them. But Lee Jae-yong, known as J.Y. Lee, isn't your usual kind of prisoner. He's air-in waiting to Samsung. A global tech giant, one of the biggest names in phones and TVs, but an empire built on much more. Memory chips, construction, insurance. It's South Korea's biggest company.

5:07Its biggest success story, by far.

5:1648 years old, J.Y. Lee is one of the country's richest, most powerful people. One of the most powerful people in the history of technology. Jeffrey Cain is author of the book Samsung Rising. You'll hear a lot from him this series. He's one of four Samsung watchers who will be helping us with this incredible story. I remember that moment well. I was there. I was outside the courthouse. This is one of the most significant moments ever in the history of South Korea. I remember this moment vividly, too. I had just set up a news bureau in Seoul for NPR, the American public broadcaster. This story captured the public's imagination and attention, and screens everywhere, and train stations even, showed these images.

6:02For months, prosecutors have been building a case to charge JY Lee with bribery. They'd questioned him for almost 24 hours straight. But the courts had refused to issue an arrest warrant. That is, until yesterday. He'd spent the night locked in a single cell. With just enough room for a mattress on the floor, a desk, and reportedly a TV made by, get this, Korean rivals LG. Samsung was founded by JY Lee's grandfather. nearly eight decades ago. Today, it's less a family business, more like a dynasty. Over the years, J.Y. Lee's father and his grandfather before him, both Samsung chairmen, had had their own brushes with the law.

6:55But they had never spent the night in a prison cell. They are the equivalent of royalty. This moment is so significant because it shows that they are no longer untouchable.

7:14As the prison bus's door slides open, guards in Navy uniforms step onto the asphalt. Suddenly, JY Lee can hear the shouts more clearly.

7:28Watching is Jake Kwan, then a freelance journalist. He's now part of the BBC's news team in Seoul. It was crazy how much media frenzy was around this. This is the most powerful economic leader of South Korea being brought down. Guards on either side take hold of his arms. As they do so, their hands partially obscure the white rope wound tightly around J.Y. Lee's elbows and then around his back and waist and wrists. And there he is getting off the bus. His arms and his torso, they're all bound up. A bit like handcuffs tying J.Y. Lee's arms to his sides, his hands together.

8:12The indignity of this moment. After all his family has done to build Samsung into a truly mighty global power. After all they have done to help his country out of poverty, to make it respected around the world. I did interview a family member from Samsung. This is what they often say. Look, we built the nation. And without us, South Korea as it exists today would simply not be here. We have worked so hard. We have done so much. And we've suffered through past dictatorships. But we did it for the country. We didn't just do it for ourselves. And why do I have to take this public humiliation? JY's father hadn't faced any of this when he took over.

8:57Sure, there had been a big family fallout. But that had been private. But today, Samsung is a much larger and more powerful company. And South Korea is a very different country. J.Y. Lee is in a tough position because he has been groomed for three decades now to become the heir to the Samsung group. His father and his father's aides have gone out of their way through various stock sales, various troubled mergers and acquisitions within the Samsung group. designed to solidify his hold on the company. That's how these Samsung reshuffles have been widely interpreted. But they hadn't finished the job.

9:40And so J.Y. Lee had taken a risk. A risk that had left him facing a multi-million dollar bribery allegation.

9:56J.Y. walks, head bowed, through the basement entrance to the prosecutor's office. The guards, in their apparent haste to negotiate the gauntlet of TV cameras, microphones and reporters, are almost carrying J.Y. Lee now. His eyes remained fixed on the floor. He didn't really look at the crowd of the journalists there. His face looked very stern. Samsung has pretty deep pockets. They can hire some of the best lawyers in the country. So it was quite a shock and surprise to see him actually taken into custody. It is a cataclysm for the nation of South Korea because nobody has ever seen a leader of any conglomerate, including Samsung, march into court, marched into his detention center in this way.

10:48He's been stripped of all royalty, stripped of the usual decorum that comes with being the heir to the Samsung empire. And now he is just like everybody else, facing trial in the greatest corruption scandal of South Korea's history.

11:04J.Y. Lee is about to face prosecutors for yet more questioning. As the doors to the court building's cramped service lift close, one last blinding burst of camera flashes sends him on his way upwards. They've got 10 days to charge or release him. If JY can avoid jail, his path to power will finally be clear. He will take over the South Korean tech giant. But if he's found guilty, his reign could be over before it's even begun. Everything rests on JY holding his nerve.

11:51I'm Elise Hu. I lived and worked in Seoul, the South Korean capital, for nearly four years, covering this story. From the BBC World Service, this is Inheritance. The stories of the families behind some of the world's biggest companies. Our journalists have scoured the archives, combed through memoirs, and handpicked experienced observers to take you inside these dynasties. At times, we'll recreate, as faithfully as we can, the pivotal moments, all to understand how powerful empires are built and passed on. Season 1, Samson. Episode 1 of 10, My Kingdom for a Horse.

12:42It's early 2016, a secluded woodland estate in southern Germany. Squeezing its way along the narrow lanes is a lorry containing an important delivery.

13:00Having safely reached its destination, a huddle of former farm buildings with cream walls, timber beams, and high-pitched roofs, a team prepares to unload the cargo.

13:13The lorry doors open. A ramp is lowered. and out walks a 14-year-old Dutch mare. She sniffs and surveys her new home. Well, that's what I imagined she did. We don't know exactly how this scene unfolded. She might have arrived in the equivalent of a rock star tour bus, blacked out windows, a limitless supply of hay bales. or she might have been wedged into a horse box little bigger than a pickup truck. We'll occasionally have to fill in the gaps in the story. We'll let you know whenever we do because parts of the Samsung story have never been made public. Anyway, the horse. According to Jae-yon Lee, reporter with South Korean newspaper Hongkye, it was one of three that arrived together.

14:12Really fancy horses. I remember one of the horses only because it was so much more expensive than I thought a single horse could cost. A horse named Vatana V, which cost about$800 ,000. Vatana V, a Grand Prix medal winner, the pinnacle of the sport of dressage. But what's important for us is the horse's new owner. She had been training in Germany, building her career. She had been a champion in numerous equestrian tournaments around the world. She's a 19-year-old South Korean equestrian who won team gold, riding a different horse two years earlier at the Asian Games. And she wanted to go to the Olympics.

14:56And so the way to do that is to get a top-level horse. But how on earth does a 19-year-old get a hold of almost a million dollars to spend on one horse? Well, she didn't. About six months earlier, a group of Samsung executives had flown to Frankfurt to sign a deal. They met the representatives of a woman whose name was Choi Soon-Shiel. This woman is in charge of Core Sports International, a sports consulting firm registered in Germany. It's the company that Samsung is in town to do a deal with. But what was mysterious is that her so-called sports company had just been founded quite recently. The previous day, in fact.

15:47It wasn't, you know, the type of company that a major conglomerate like the Samsung group would want to shower with cash. Despite the lack of trading history, Samsung execs agreed to sponsor Core Sports International in a deal worth about$19 million. They announced they will fund a dozen horses, a team of trainers and coaches, all in support of South Korea's equestrian hopefuls. But it later turns out that virtually all the money Samsung paid to Core Sports International goes to one single rider, the future owner of Vitana V. and a young equestrian who happens to be the daughter of the woman in charge of the sports consulting firm.

16:38Choi Soon-sil wasn't very well known in South Korea, but this woman was connected to the South Korean president Park Geun-hae. Her name was spotted in reports here and there, but people never really assumed that she might be that important of a figure. We'll hear more about Chae Soon-Shill later in the series, but for now, it's enough to know that she's a powerful figure who has the ear of the president. So when her daughter needs a horse to take her dressage up a gear, naturally, she just asks her buddy, the president, for help. Which is where Samsung and JY Lee come in. Even to people who were following events later, it wasn't clear what exactly was going on here and how Samsung might be rewarded.

17:32Because if you're the boss of a chaebol, the Korean word for one of the country's family-run business empires, then it makes total sense to keep the president on side. It's a strange-sounding sponsorship, but it might be in JY Lee and Samsung's interests. Prosecutors will allege a few months later that Samsung agrees to the equestrian deal because J.Y. Lee owes the president a favor. Because, they'll say, she's just helped him navigate a crucial and extremely controversial business merger that will define his future. His family's future. The future of Samsung itself.

18:20The sun is out, the birds are chirping, and the open road is calling. Bring on the spring at the Honda Spring Event and take that road trip you've been dreaming of. Now's the time to check out the Honda Civic and HRV from Honda, the 2025 Kelley Blue Book's KBB.com best value brand. For great deals, visit your local Chicagoland and Northwest Indiana Honda dealer today. Based on 2025 Consumer Choice Awards from Kelley Blue Book, visit kbb.com for more information. Spring showers bring epic off-road adventures. So bring on the mud and bring on the spring at the Honda Spring Event. Honda vehicles are built for exploring.

19:01With the rugged Honda Pilot, Ridgeline, CR-V, and Passport, the road might stop, but you're not done. All from the 2025 Kelley Blue Book Best Value brand. For great deals, visit your local Chicagoland and Northwest Indiana Honda dealer today. Based on 2025 Consumer Choice Awards from Kelley Blue Book, visit kbb.com for more information. Make Mother's Day even more special at Whole Foods Market. Kick off brunch or dinner with quality cheese and charcuterie with no synthetic nitrates. Then go seafood. There's an abundance on sale at Whole Foods Market, where it's all sustainable while cod or responsibly farmed.

19:36At the bakery, grab seasonal treats like their strawberry pretzel cream pie, and you can't go wrong with a ready-to-heat quiche Lorraine, deviled eggs, and fresh-cut fruits to go. Celebrate mom with Whole Foods Market. Choiceology, an original podcast from Charles Schwab, is a show about the psychology and economics behind our decisions. Join host Katie Milkman, an award-winning behavioral scientist and author of the best-selling book How to Change as she shares true stories from Nobel laureates, authors, athletes and everyday people about why we make the choices we do and how to make better ones to help avoid costly mistakes.

20:14Listen to choiceology at schwab.com slash podcast or wherever you listen.

20:26The tension was palpable in the air. It could have easily descended into a brawl. In central Seoul, a crowd is building. It's July 2015, six weeks before the equestrian deal. You could feel the anger and the frustration and the resentment. Hundreds of investors cram into the fifth floor conference hall. Middle-aged men in business suits mix with others in t-shirts and trainers. Outside, several hundred more jostle for space, craning their necks. I wasn't there, but Jeff's and other reports suggest the mood is tense. A ripple of expectation runs through the crowd as a man arrives, smartly dressed in a navy suit and sky blue spotted tie.

21:18This is the person they've been waiting for. The co-chief executive of Samsung Construction and Trading. Samsung C &T, a major part of the Samsung empire. One account describes how an older man in white traditional robes starts shouting something from the waiting crowd. He's clearly furious. He rushes towards the exec. Samsung security tackle the man in white. There's a brief tussle before he's forcibly removed from the venue.

21:56Months of argument and acrimony have built up to this. Shareholders will vote on the merger of Samsung C &T with a company called Chayil Industries. Which was the de facto holding company of Samsung. Chayil Industries is a kind of parent company controlled by the Lee family. Its main role is to oversee and invest in lots of other companies. J.Y. Lee, the heir to the empire, owns just under one quarter of this holding company, Chaeil Industries. He doesn't own any of Samsung C &T. He will, but only if this merger goes through. The deal on the table for Samsung C &T shareholders is that for every one of their shares, they would receive only about one-third of one share in the new entity.

22:54And that offer? Well, it hasn't gone down so well. It was a horrible deal for anybody who owned a piece of Samsung C &T. The merger terms propose that Samsung C &T is worth only one-third of what Cheyul Industries is. That's not what the financial markets say. And it's certainly not what many shareholders believe. And the person that this benefits is JY Lee. It benefits the Samsung Lee family. Because if the merger goes through, JY Lee, who's already the majority shareholder in Chayil, will also own the biggest single stake in the new company. Some shareholders suspect that he's trying to devalue the merger target, Samsung C &T.

23:47It's something J.Y. Lee denies, but the allegation will hang over him for the next decade. Something we'll come back to later in our series. These shareholders claim that what he's after is not only the cheapest price in this deal. It's control. Control over something even more important than the merged businesses, which will become the new holding company. Control over an even greater source of power and wealth. Samsung Electronics. Although Samsung Electronics is the core company of this conglomerate, JY Lee does not own a controlling share of it. JY already owns part of this smartphone and TV side of the business, but his grip is not secure.

24:39Because he's in the middle of a succession struggle. To take control of the business empire when the aging and ailing current chairman dies. And it's not just angry shareholders he has to contend with. Lately, some in the media have been talking up his eldest sister. They say that perhaps she would be a better future chairman. And then there's his cousin's side of the family, some of them unpredictable and indignant, believing they were denied their fair share of the business when Samsung's first chairman died decades ago. That is why this deal is so important. With this one merger, J.Y. Lee can secure his position at the top of the whole Samsung group.

25:31And because Samsung C &T owns a small but crucial stake in Samsung Electronics, he can also assume power over this, the jewel in the crown, the company and the family's key source of wealth.