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

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1:49It's 1969. Three years after a scandal that saw Samsung chairman B.C. Lee step down from running the company he founded. And things haven't been much better since. At a moment like this, I picture B.C. Lee staring across the tree-lined grounds of his home in central Seoul, a two-story mansion in its own high-walled compound, An oasis amongst the South Korean capitals developing high-rises. A good place to think. BC Lee had stepped aside as Samsung's chairman, hoping, it's thought, that this would be enough to spare his family. Samsung told us he'd done it as a sign of respect for Korean society, since it had been his son who caused the controversy.

2:40Whatever the plan, it hadn't worked. His second son, Yi Chang-hee, or as we're calling him, C.H. Lee, had been punished with prison. He'd been in charge of the fertilizer plant Samsung had built at the president's bidding. The so-called Saccharin scandal, the smuggling that took place under the cover of the construction project, had taken place on his watch. C.H. Lee had appealed and been released early. And things haven't been going much better with another of B.C. Lee's three sons. In the crisis that followed the saccharine smuggling scandal, B.C. Lee had appointed his eldest son, E. Meng Yi, or M.H.

3:27Lee, to run the family business. Like any firstborn Chable son, M.H. Lee had been groomed for the top job for years. Everyone assumed he would take over one day. But things hadn't gone exactly to plan. Accounts differ about what exactly happened. According to M.H. Lee, he ran Samsung for the next seven years and only left because his father couldn't stay away. But the autobiography of B.C. Lee suggests that he, the founder, had needed to step back in after just a few months. Samsung told us M.H. Lee was never chairman of Samsung, but that he managed some Samsung companies for a period of six months and then stood down voluntarily.

4:18According to B.C. Lee, his eldest son was a bit of a loose cannon. He was the big personality. He was a big talker. Business and technology journalist Jeffrey Cain has interviewed people who knew M.H. Lee. One of his big problems that he was running into is that he had a temper. He was emotional. Not the kind of leader who would make clear, concise, rational decisions all the time. At one point, M.H. Lee required his father's aides to come in to his room and bow before him and kneel. This would be a major loss of face because it would mean that he's usurping the role of his father. They're supposed to be bowing to the father and not to the son.

5:01BC Lee had received complaints from some of his most trusted executives. Jae-yon Lee, a reporter at South Korean newspaper Hankyure, is familiar with the founder's version of events. In less than six months, he had the entire group in turmoil. M.H. Lee clearly wasn't chairman material. Not yet. But then, things take a surprising turn. B.C. Lee hears about a letter. An anonymous letter addressed to President Park Jung-hee, posted to the Blue House, the presidential residence on the northern outskirts of Seoul. The letter was a list of assets owned by B.C. Lee. Businesses, properties, financial holdings.

5:51Just the sort of thing a president already suspicious of B.C. Lee's wealth and power might use against him. A president who'd threatened to jail him and take away his business once already. Someone has tried to sell him out. Who would have dared? And what else are they capable of?

6:22I'm Elise Hu. 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, Samsung. Episode 3 of 10, The Prince's Rebellion.

7:10BC Lee stubs out a cigarette before lighting another. He can take the frustrations of business and attacks of politicians, although they weigh heavily on him. But an assault from within? It's more than an assault. It's a betrayal. B.C. Lee has his enemies, of course. There are plenty of politicians and businessmen he's upset, knowingly or not, over the years. But these outsiders couldn't have access to this kind of information. It must have been someone close to him. Because B.C. Lee is trying to escape government scrutiny, They don't want his wealth being seen in the eyes of the government or being scrutinized in some way.

7:54The government, until this point, may not have known about all of these assets. Certainly not exactly how much they are worth. And the last thing B.C. Lee wants to give President Park is any excuses to put him back under the microscope. There's no sign yet that the president will act. But the mere existence of this letter has lit a fuse. It might explode any time. This part of the story gets murky. It's so murky that we can't know for sure even what was in the letter. No copy of this letter has been recovered. I'm not aware of anybody having found it in a historical archive somewhere. It's only been recounted in later memoirs and later accounts written by Lee family members.

8:45There are even some suggestions that the letter contained allegations of corruption against B.C. Lee himself, including involvement in the saccharine smuggling scandal three years earlier. Remember, B.C. Lee had denied any knowledge. If he was directly involved, that would change everything. Samsung rejects this. It told us B.C. Lee was unaware of the matter until charges were brought and that he was subsequently cleared of any wrongdoing. So, who sent this letter? You got to remember, South Korea at the time, it's a very small place. I mean, it's not the same country as today. South Korea is a place where word gets around, and if you do something, the government, which is a police state, is going to know about it.

9:30I mean, Samsung had really good intelligence networks across the country, and they could figure things out too. And these networks have helped B.C. Lee identify two possible names. His middle son, C.H. Lee, imprisoned for the Sakharin scandal, and his eldest son, M.H. Lee. M.H. Lee certainly has the temper, and his pride must have taken a blow when B.C. Lee came back out of retirement. But his path to the chairmanship wasn't completely closed. There was still time to redeem himself, time to mature, to soften, to learn. And his desire to succeed his father was clear for all to see. Would he really put all of that at risk over a false start at leadership?

10:17And his middle son? He had taken the fall in the saccharine smuggling scandal, but it's far from certain that he knew anything about it. So when C.H. Lee got out of prison, he had every reason to be angry. But would it be directed at his father? And so the story is, they came out of prison, right? And then he was really furious because his father was just treating him very badly, even after he took the fall. He wanted to have a warm welcome. But by then, he clearly was not fit to run the company, having just gone to prison. And so the father did not welcome him with open arms. But was C.H. Lee desperate enough to try and oust his father to try and seize control of the business in a coup?

11:05B.C. Lee has got a decision to make. Which of his two eldest sons is guilty? And what, if anything, is their punishment? Family is everything. It's what a chaebol business like Samsung is built upon. In South Korea, families don't break apart this easily, especially prominent families like the Lee family. And the way this could be seen among the public, it would be just a travesty to see this family fighting in this way. There's supposed to be a representative family of Korea.

11:39But as much as it pains him to admit it, the evidence is clear. B.C. Lee concludes that it points to his recently imprisoned middle son, C.H. Lee. That said, his eldest, M.H. Lee, isn't completely off the hook. B.C. Lee suspects that he knew what his brother was up to. M.H. Lee either didn't do enough to dissuade him, or worse, was in on it too. Whatever the truth, B.C. Lee decides that both men will have to leave the business, for now at least. And all of this leaves him with a new problem. With his first and second sons out of the running, who can he now trust to lead Samsung when he's gone?

12:30In his heart of hearts, he knows the answer. He knows who he has to choose, who he's already chosen, albeit not officially. But it's a very unusual step.

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15:14It's mid-September 1976, seven years since B.C. Lee's betrayal in the letter to the Blue House. He's delayed this moment for long enough, but time is running out. A few days from now, things could look very different. Tomorrow, he's flying to Japan for surgery. While he'd been in Tokyo that summer, he'd gone for a hospital checkup, and the doctors had found a stomach ulcer. They'd told him it was cancerous, so tonight he's called a family meeting.

15:49The assembled guests already know about their father's cancer, and they've probably guessed about the other big news he'll be revealing tonight. Lately, he has been reflecting on what makes a good leader. The Samsung Group now has around 100 ,000 employees and more than a dozen subsidiaries. What qualities should its next chairman possess? Virtue, trustworthiness, reliability, creativity, good judgment, drive. The courage to take responsibility. Do any of his sons have all of those qualities? I did interview a member of the Samsung family, and he said that back when B.C. Lee was thinking about this inheritance, he didn't really have much faith that Samsung was going to get that far.

16:41He actually thought that when he died, Samsung would end. He did not realize it was going to become the major corporate empire that we now know today. In the last few years, the business had expanded rapidly. In 1969, it had begun making televisions. Samsung Electronics had been born. Refrigerators, washing machines, air conditioners, rice cookers all soon followed. But all that needed huge investment in research and development, factories, people. Add to that the gamble the tech business had just taken on semiconductors. Who knew when or if that would pay off? Semiconductors were still an early industry at the time in Korea.

17:31They had bought an American joint venture that was failing and were trying to turn it into a maker of transistors for the popular electronics of the day. These are calculators and early computers and so forth. But it's an extremely technologically complex business that takes a lot of expertise to run. It's not something that you can just buy and hope that it works out in the end. The technology is constantly advancing, with computer chips doubling in efficiency and power on a regular basis. That makes it a risky bet and an expensive one. It takes a lot of cash to develop this tech. And if you're not as quick as your rivals, then your efforts might not be worth all that much.

18:16Jake Kwon is a journalist in the BBC's news team in Seoul. A lot of industry analysts reportedly have been very pessimistic about such ventures. Samsung was already making good money in South Korea in the domestic market. It was already one of the biggest corporations. So why are they taking such big risk putting all this money in a venture that might not work out? B.C. Lee wonders if he really wants to burden any of his children with this responsibility.

18:50Let's imagine the Lee family is all sat around a large wooden dining table. B.C. Lee, the eldest and highest ranking, begins his meal first. B.C. Lee's children are here, his sons and his five daughters. But there's no way any of them, astute though some are, could inherit the kingdom. In South Korean chaebol culture, women simply don't assume those kinds of positions. There is actually one notable absence. One child is away on business, and he is the one who matters most. because B.C. Lee is about to drop a bombshell. B.C. Lee really liked what he saw in K.H. Lee, his third son. He thought that K.H.

19:44had the right mix of brains and determination to lead Samsung. And it was his third son, K.H. Lee, just 27, who'd been pushing the recent semiconductor project. It's too early to call it a success, but to have convinced his father it was a gamble worth taking, that had taken guts. K.H. Lee had even stumped up a lot of his own money. That showed conviction. But B.C. Lee's third and youngest son was not what you would call a natural leader.

20:20Nobody expects KH Lee to become the next chairman of Samsung. He is a lonely kid. When he was a child, he didn't have many friends. He recounted how he would go home and he wouldn't really go out and play with the other kids. He'd developed more of an affinity for dogs than people. In his lonely years of study in Japan, away from family and friends and facing discrimination as a Korean, the animals had given him comfort. It was the same with technology. He would take apart a TV, study the interior, and then put it back together. He has this eccentric personality. He's more of a recluse. People don't really understand him.

21:01He also had a habit of watching films, and he would watch it ten times or more. So Ben-Hur was his most favorite film. A Hollywood historical epic from the 1950s. He would watch the first time and he would study Charlton Heston's character. He would study the way that he spoke and the way that he acted. Then the second time he would study the supporting actors and actresses. The third time he would study the sets and the backdrops and he would study the director's vision. But he believed that to truly understand anything, you had to take this exact approach. You had to watch the movie ten times to get inside the mind of the director and to understand what this movie is really about.

21:50In our imagined family scene, the Lees are now finishing dinner. Some of them are tense with excitement, expecting this could be their moment. even after the ups and downs of the last 10 years, the saccharine scandal, the letter, the crossed wires. Especially B.C.'s eldest son, M.H. Lee, according to his later memoirs. He thinks that there's still hope. He always thought that he and his father could reconcile and have a big hug, perhaps, and M.H. Lee would lead the company one day. And then the moment they've all been waiting for. Perhaps B.C. stands and moves to the center of the room. And he says what some of them may have suspected, but not dared believe.

22:41From now on, Samsung will be led by K.H. Lee. M.H. Lee is crestfallen. As B.C. Lee moves the conversation on to how he intends to divide the Samsung group amongst his children when he dies, M.H. Lee can't process the shattering blow he's just been dealt. Everyone expected, tradition dictated, that he, the eldest son, should inherit the chairmanship. B.C. Lee doesn't know it. In fact, he won't live to find out. but he has opened a schism, a family feud that decades from now will threaten to blow the Lees apart and threaten to destroy their grip on Samsung. That's coming up on Inheritance.

24:02That was episode three of Inheritance Samsung. Listen wherever you get your BBC podcasts.