Jay Y. Lee takes control of Samsung foundations

Jay Y. Lee

Samsung Electronics Vice Chairman Jay Y. Lee, the only son of the Samsung Group’s chairman, has been appointed chief director of Samsung’s two cultural and charity foundations on Friday, another step in his taking control of the country’s largest conglomerate.

The 47-year-old will serve as chief director of the Samsung Foundation of Culture and Samsung Life Public Welfare Foundation, replacing his frail father, Samsung Chairman Lee Kun-hee. The announcement came as the older Lee remains hospitalized after he suffered symptoms of cardiac arrest last May.

Samsung Group said in a statement that the vice chairman “is the one who can understand the founding principles better than anyone could.

“Lee is expected to follow and further develop Samsung Group’s management philosophy and social contribution.”

The two foundations are considered an important part of Samsung’s complex shareholding structure, though they don’t engage in profit-making businesses.

Started in 1965, the Samsung Foundation of Culture, which runs art museums, holds a 4.7 percent stake in Samsung Life Insurance and a 3.1 percent stake in Samsung Fire and Marine Insurance. It also has stakes of less than 1 percent in Cheil Industries, Samsung C&T, Samsung SDI and Samsung Securities.

Samsung Life Public Welfare Foundation, which operates hospitals and supports children with disadvantaged backgrounds, holds a 2.2 percent stake in Samsung Life Insurance.

Chairman Lee's term at Samsung Life Public Welfare Foundation were to last through August 2016.

In 2012, the heir apparent was appointed as member of the Samsung Life Public Welfare Foundation for the first time. But a year later his name disappeared from the board.

Although Samsung is trying to keep the succession machinations under the radar, the recent stake purchases by Jay Y. Lee of Samsung’s financial units as well as the IPO debuts of Samsung SDS and de facto holding company Cheil Industries are all interpreted as signs he is increasing his clout within the conglomerate.

The IPOs of SDS and Cheil Industries are expected to help raise money he will need to pay inheritance tax estimated at 7 trillion won ($6.4 billion).

The listing of Samsung SDS in particular was in the spotlight as the technology service arm of Samsung Group is considered a key subsidiary in the succession process, with Jay Y. Lee owning an 11 percent stake.

Chairman Lee holds sizable shares in only two Samsung companies.

Those include a 3.38 percent stake in Samsung Electronics and a 20.76 percent stake in Samsung Life Insurance, estimated to be worth 11 trillion won.

In the meantime, the value of shares owned by three children of the chairman increased threefold between 2014 and 2015, according to CEO Score.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]