<![CDATA[Explained: why Samsung heir's corruption case poses a new test for embattled South Korean firm]>

All eyes are on South Korea's Supreme Court on Thursday as it hands down the final verdict in a high-profile corruption case that has ensnared disgraced former president Park Geun-hye, her controversial friend Choi Soo-sil and Samsung Group heir Jay Y. Lee, otherwise known as Lee Jae-yong.

Lee, now 51, was found guilty of bribing Choi, embezzlement and other crimes and sentenced to five years in jail, which was later reduced. Park was impeached and jailed for 25 years, with Choi getting 20 years. The two friends were found guilty of forcing local conglomerates such as Samsung to donate millions of dollars to Choi's two dubious foundations, and for receiving further bribes from Samsung. Both were also fined 20 billion won (US$16.4 million).

Prosecutors and the three accused brought the case to the Supreme Court, which will determine whether the lower courts reached a correct decision.

The court could either stick with the reduced sentence given to Lee " which saw him freed in February 2018 after serving 353 days behind bars " or send the case to the appeal court for a retrial. Non-governmental organisations at the time had protested against what they said was a biased court decision favouring Lee.

Samsung Group heir Lee Jae-yong. Photo: EPA-EFE alt=Samsung Group heir Lee Jae-yong. Photo: EPA-EFE

Why is this case significant?

Samsung Group, which contributes one-quarter of the South Korean economy, Asia's fourth-biggest, owns Samsung Electronics, the world's top smartphone and chip maker. It is reeling from export curbs by Japan and ongoing economic uncertainty worsened by the US-China trade war.

Sending Lee back to prison would deal a blow to Samsung. The case is also seen by South Koreans as a litmus test for whether Seoul will indeed remain committed to reforming its family-oriented business conglomerates, known as chaebol.

"If the Supreme Court rules in favour of Lee, it would rekindle a public anger over a presumed tendency by courts to be lenient toward Samsung and other heads of conglomerates," said Chung Sun-sup, an expert on chaebol.

"This is a dilemma for all of us," Chung added.

When will the decision be made?

The full bench of all 12 justices of the Supreme Court, who have been deliberating the case and have met six times so far, will start delivering a final verdict at 2pm local time on Thursday. Court proceedings will be live-streamed due to the public interest in the case. The three accused are not expected to appear in court.

Former South Korean president Park Geun-hye arrives in court during her trial. Photo: EPA-EFE alt=Former South Korean president Park Geun-hye arrives in court during her trial. Photo: EPA-EFE

What are the key questions to be decided?

Although Park, Choi and Lee were all involved in the same Samsung bribery scandal, rulings by lower courts were inconsistent.

An appeal court found that the total amount of bribes Park and Choi received from Samsung stood at seven billion won (US$5.8 million), including 3.6 billion won that Samsung sent to Choi's German-based firm to sponsor her daughter Chung Yu-ra's equestrian training and another 3.4 billion won used to buy three expensive horses for her.

But a different appeal court where Lee stood trial acknowledged only the 3.6 billion won as bribes, accepting Samsung's argument that it merely allowed Chung to use the horses and it did not transfer ownership to her. With the 3.4 billion won used to buy the horses deducted from the total bribery amount, Lee was freed from prison with a suspended jail sentence.

If the Supreme Court rules the 3.4 billion won paid for the horses constituted a bribe, the total bribery amount would surpass the five billion won mark. Under South Korean law, offering bribes of five billion won or more would land the provider in jail for at least five years. This would make it almost certain that Lee would return to jail, Yonhap news agency said.

How is Samsung still implicated?

Another focal point for Thursday's ruling will be whether the top court will accept prosecutors' arguments that Samsung offered bribes in return for the government's backing for the merger of two of its subsidiaries in order for Lee to smoothly inherit group control from his ailing father, Lee Kun-hee.

Park and Choi's appeal court ruled in favour of the prosecution and found that another 1.63 billion won donation from Samsung to a child sports foundation run by Choi's family was a bribe.

But Lee's appeal court saw it differently, finding that the vice-chairman "passively" complied with Park's demand to sponsor Choi's equestrian daughter after being intimidated by the president and Choi.

If the Supreme Court rules that this 1.63 billion won donation was a bribe, it would raise the kickback amount to over five billion won, meaning Lee would be back in jail.

What may happen next?

The Supreme Court could decide to return the case to an appeal court for a retrial.

Prosecutors have also been looking into new allegations that accounting fraud was committed by Samsung BioLogics to smooth Lee's succession to power.

The alleged window-dressing for Samsung BioLogics could have inflated the value of Cheil Industries's stake in Samsung BioLogics ahead of its merger with Samsung C&T Corp. in 2015, to benefit Lee, who was a major stakeholder in Cheil at that time.

It remains to be seen whether this factor would be taken into account in the Supreme Court ruling.

This article originally appeared on the South China Morning Post (SCMP).

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