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South Korean electronics powerhouse Samsung is the second largest multinational tech company in the world, bringing in more than $177 billion in revenue each year. Second only to Apple, it specializes in the design and manufacturing of mobile devices, TVs, and a host of other devices that are now commonplace in households and businesses.
However, the Samsung brand recently came under scrutiny for its involvement in the South Korean political scandal that saw the country’s president Park Geun-hye impeached.
The Alleged Involvement of Samsung Heir Lee Jae-Yong
As the South Korean scandal unfolded, calls arose for the arrest and detainment of Samsung heir Lee Jae-yong, the grandson of the company’s founder Lee Byung-chul. His detractors accused him of colluding with other high-powered presidential favorites to funnel money into Geun-hye’s charitable foundations part of a money-making ruse.
While many of the president’s friends were arrested and questioned, South Korean courts debated about whether or not to issue a warrant for Jae-yong. The high court finally decided that not enough evidence existed for the Samsung heir to be arrested.
The court’s decision was predictably met with controversy and anger as many in the country argued that Jae-yong avoided arrest simply because of his name and position at Samsung. Were he an ordinary citizen or part of a company that lacked the multinational standing and worth, he may have been arrested without hesitation.
Even more, many of his critics argue that he is the de facto head of Samsung simply because he is related to the company’s founder. They say that he lacks any real business expertise and thus presumably lacked the prowess and intelligence to avoid the political scandal in the first place.
The court’s refusal to issue a warrant for Jae-yong brings prosecutors’ case against the president to a standstill. They relied on the testimony of Jae-yong as well as any facts that they could have gathered legally after his detainment to help prove their own case in court.
The Impact of Scandal on Samsung’s Stock
Samsung’s leaders would be the first to agree that 2016 brought on unheard challenges to the company. The year started with the unveiling of the unprecedented Galaxy 7, a rival to Apple’s iPhone 7. The Galaxy showcased all of the best tech features that people wanted but could not find in any Apple iPhone product.
Shortly after its release, however, Samsung and consumer protection groups began receiving reports of the Galaxy 7 igniting. The phones would catch fire while they were being used or set aside in people’s pockets or purses.
No reason initially could be found for why the phones were bursting into flames. However, after more than one hundred reports of injury and property loss, Samsung issued a massive Galaxy 7 recall. It lost out on all of the profit it anticipated receiving from Galaxy 7 sales.
No sooner than had the Galaxy 7 fiasco calmed did the controversy involving Jae-yong’s involvement in the South Korean political scandal arise. Even with the courts finding no reason to arrest him, stock market experts predicted that Samsung’s stock would fall. However, Samsung stock remains strong primarily because tech investments remain some of the most popular buys in the stock market right now.
The company largely escaped the worst scenario that both scandals could have inflicted on its stock prices. Moreover, stock experts predict that Samsung will remain one of the best investments in the market throughout 2017.
The stocks have strong valuations, making them a solid bet for tech investors. Samsung also promises a new line of mobile and electronic devices that could bring it back into the good graces of the tech buying public.
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Charles Balch
Charles was born and raised in gloomy Leicestershire before deciding to move to the United States. He is currently putting his BA in Journalism and Mass Communication to good use by writing well-documented articles focused on the latest medical and scientific discoveries.
