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Samsung’s ‘Trial of the Century’ may impact Silicon Valley — and liberals living in it

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Samsung executives find themselves embroiled in political scandal and controversy in South Korea after the impeachment of President Park Geun-hye. (Courtesy photo)
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As a Korean-American, I am still reeling from South Korean President Park Geun-hye being ousted from her office after the Constitutional Court upheld her impeachment. For the 77 percent of Koreans who said they supported the impeachment right before the verdict, this was the culmination of a young democracy overcoming its first major challenge.

Rule of law worked in South Korea, thanks to an aggressive investigative media, a persistent show of peaceful street protests, a National Assembly which responded to its people and a court system which sought to keep the impeachment trial fair and swift. For any Korean over 30 years of age, it was a shocking change from the military dictatorships of yore.

So how does this relate to Silicon Valley? Bigly, for those of you projecting the Korean impeachment to your own heart’s desire. The impeachment is the end of the first act in what may be a three-part overhaul in South Korea. And Samsung is going to be a major player in the upcoming acts.

The de-facto head and crown prince of Samsung, Jay Y. Lee, was arrested and indicted as a part of the impeachment trial for bribery charges. Lee is accused of embezzling $36 million to Choi Soon-sil, Park’s close confidant who secretly made presidential decisions on behalf of Park. He also is charged with illegal transfer of property abroad and perjury before Parliament, among other crimes.

Four other heads of Samsung face similar charges. They all formally denied the charges in a preliminary hearing last Thursday.

For those currently using a Samsung product or are Samsung fanboys, this trial is not going to end your services or discontinue your favorite gadgets in the short-term. Samsung Electronics is a subsidiary of the larger Samsung empire, and its CEO was not part of the trial. Even if the throne is empty because Lee sits in jail, the octopus-like conglomerate, or chaebol in Korean, will soldier on.

Dubbed the “trial of the century” in South Korea, there is a huge public hunger among Koreans right now to push back against the old political and economic order that have both elevated the country into the developed world and suppressed other economic means to make a successful living. They just took down the old political order, a conservative president who won her election largely because she is the daughter of the military dictator responsible for the economic miracle. Now, they smell blood on overturning Samsung, the largest chaebol in South Korea.

Even with public pressure, it is unclear if Lee and the four executives will be tried. But their odds are not looking good, especially with the impeachment. With Park out of office, she is stripped of all presidential powers and now is subject to prosecution for the Samsung trial. If she has incriminating evidence against Lee, she may spill it to save herself from jail time.

If Lee is found guilty, it raises interesting questions about Samsung’s future. The conglomerate has been paving the way for years to allow a smooth dynastic transition from Lee Kun-hee, who is ill after a heart attack in 2014, to Jay Y. Lee. While there are other family members to carry over, it muddles the dynastic line and the relative stability that comes with it than, say, a board-run company like Apple or Facebook.

But a deeper implication is if the South Korean government will use a possible conviction of Lee to break up Samsung. There are 80 Samsung compartmentalized companies within the chaebol, and that is their source of strength. This blow will not discontinue the newest Galaxy phone model or dilute the quality of its LED TVs and computers, but this may weaken Samsung’s global leverage to compete with Apple, Dell and Sony. And Samsung’s decline in the electronics market is a significant shakeup that will make waves in Silicon Valley.

But let’s take a step back and just admire this moment of what happened in South Korea. They achieved history already, but the fight is not over. For those in the United States who believe the current democracy cannot work, I hope there’s a lesson or two to take away.

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The Examiner’s own Joe Fitzgerald Rodriguez broke the story that San Francisco’s district attorney is investigating Uber’s Greyball program, a tool covertly used to identify and evade local authorities trying to monitor any illegal activities.

Supervisor Aaron Peskin believes this is an “obstruction of justice”—and I agree. The New York Times piece that unveiled the Greyball program was explosive. We all knew, to varying degrees, that Uber is callous about authorities and plays loose with the rules, but the revelation still shocked the industry.

Uber said publicly that they won’t use Greyball anymore. But that is not good enough. The time for apologies and assurances have past. I hope the district attorney finds more truths about Greyball with the ongoing investigation because San Franciscans deserves it now.

The Nexus covers the intersection of technology, business and culture in San Francisco and beyond. Write to Seung at seungylee14@gmail.com.

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