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Samsung Succession: Market Reaction Economist Intelligence Unit Waqas Adenwala Updated: 2021-05-04 14:56:11 KST

11 BILLION U.S. dollars. It's an amount that most of us can't even fathom, but imagine being taxed that amount.
After months of speculation over how stakes in Samsung held by late chairman Lee Kun-hee, formerly South Korea's richest person, would be distributed among his heirs, his family just last week outlined a long-awaited plan to pay one of the largest inheritance-tax bills in history as well as their intention to donate 900 billion dollars for medical facilities.
Not only that, they're also giving back to the society, the late chairman's extensive personal collection of Dalis, Picassos, Basquiats and Monets.

"Family members of late chairman Lee Kun-hee said they will donate about 23-thousand cultural assets and artworks to the country. As minister of culture, sports and tourism, I highly appreciate and express deep gratitude for the family who followed the late chairman's wishes of sharing his love of our cultural assets and artworks with the people."

It's a bill the family is paying off to inherit both the wealth and corporate power of the wealthiest businessman in South Korea.
This and the transfer of the late chairman's roughly 21 billion dollar wealth to his wife and three children:
We have Waqas Adenwala, Asia Analyst at the Economist Intelligence Unit joining us live from Singapore.
Waqas, great to have you again on the show.

Let's first talk about the massive tax bill which is indeed one of the largest ever in Korea and globally at nearly 11 billion dollars, more than half of the value of the late chairman's 21 billion dollars worth estate, and three to four times the Korean government's total estate-tax revenue last year.
How do analysts view this tax scheme? How does it compare with that of other economies?

The family paid its first installment of over 10 billion dollars last week and to reduce liability of the hefty tax bill, they are donating tens of thousands of art pieces, including 60 that the South Korean government designates as national treasures or treasures. There are also rare works of Chagall, Monet, Picasso the heirs would have had to pay taxes to inherit them had they not given them away.
Have we seen other wealthy of the wealthiest pay off a massive inheritance tax in a similar manner?

The regulatory filings that revealed the changes in shareholdings by Lee's son and Samsung Electronics vice chairman Lee Jae-yong - that's probably what investors were much more interested about. Jae-yong has been the de facto head of Samsung Electronics since 2014.
The split of fortune between the wife and three children one that cements Lee Jae-yong's grip over the entire group. How is the market and analysts like yourself reacting to this?

Samsung group, however, retains its cross-shareholding structure that flows from Lee Jae-yong to Samsung C&T to Samsung Life Insurance then to Samsung Electronics. How is this viewed by investors and analysts overseas?

Lee Jae-yong tightened his control over Samsung group but he's currently in jail convicted of bribery, halfway through his two and a half year term. He's also dealing with another court case involving merger of two Samsung affiliates. Is this considered as a major risk among Samsung investors?

Waqas Adenwala at the Economist Intelligence Unit in Singapore joining us tonight. Thank you for your analysis.
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