TechStuff Classic: The Samsung Story Part 2

twenty sixth, twenty seventeen. Hope you enjoy Samsung, as it turns out, is a conglomeration of companies that do lots of different things. Electronics is just part of it. It's one of the more forward facing components, especially outside of Korea, but it's just one element of the overall company. Also, keep in mind, I'm talking about a Korean company with a lot of Korean names. So again, I apologize right up front for the numerous occasions I'm sure I will

mispronounce Korean names. It is not through any lack of respect, but rather just a simple ignorance of the correct pronunciations for that language. I will do the best I can. However, it will get a little confusing because I'm going to talk a lot about the family who was in charge of Samsung, and there are an awful lot of them, but we will get to that a bit later. Now, If you remember, I left off at the point when Samsung began to produce its first televisions and washing machines.

That brings us up to the nineteen seventies. So what was going on in Korea during that time? Well, you might remember in the last episode I told you that Korea had come under the rule of a military leader, a general named Bach Jonghi or also sometimes spelled Park chung Hi. These names are anglicized version of the Korean names, so often it's as close to an approximation of an anglicized pronunciation as we can get. So there are different spellings.

Park Chunghi is probably the most common, but I've also seen Bach Chonghi same person. However. In fact, this is a good time for me to mention this. In the previous episode, I talked about a US backed leader, and I talked about THEIM a lot. I said Li Sung Man and also mentioned a man named singman Ri. Both of those names are actually the same person. See in the Western world, we will say a person's surname last.

But in Asia and many Asian cultures at any rate, you say the surname first, So Lee is the surname Li sungman or singman Ri is the way that we often see it spelled, depending upon the source you're looking at. So I know it gets a little confusing, but these are the same people. They are just anglicized versions of the name. Anyway, let's go back to Park Chunghi, the general, the person who had been in charge of South Korea

in nineteen seventy two. He put the country under martial law and solidified his power in South Korea, they would hold elections and Park Chunghi would win those elections. But there were a lot of people who essentially said that Park Chunghi was really just a military dictator. Just a military dictator is probably the wrong way of saying it, But he was a military dictator as opposed to a

legally elected president, according to whom you ask. Meanwhile, at the same time, South Korea government officials were starting up talks with their counterparts in North Korea, and the two countries talked about wanting to reunite, to have a reunification of Korea. They said that there were a lot of requirements for that. One of the big ones was that they demanded no outside interference. They didn't want other entities

coming into Korea to try and guide the process. Remember, Korea had been the subject of a lot of interference from the Soviet Union, from the United States of America before that, Japan, and China, so they were really determined to do this themselves. But spoiler alert, that never really happened. In nineteen seventy nine, the head of the Korean Intelligence Service, Kim jagyu, assassinated Park Chunghi, so, the head of the Korean version of the CIA, assassinated the president of the country.

After that, there was a brief period of civilian rule where the Prime Minister assumed roles of the president before another general. This one fellow by the name of General Chu du Pan, receives power in nineteen eighty and thus returned the country back to a dictatorship with token elections, and that would continue to be the case until the late nineteen eighties. So Korea still had a tumultuous and often violent power structure, with people struggling to rule the

country in different ways. Remember, even though you know you would say that that Park Chunghi was a dictator. He was largely seen as someone who worked very hard to improve conditions in Korea, so he wasn't just exploiting his power, at least not in the view of many people. However, that being said, he also wasn't willing to have a transition of that power, and thus eventually he was assassinated.

So very complicated political structure in Korea at the time, and despite all that political chaos, Samsung continued to do well. I'll talk more about how they did that a little bit later in this episode. The company had, for one thing, diversified quite a bit. It was getting into so many different industries and it was playing a key component in the economy of South Korea. It was also creating Korean electronics with Korean parts, so they weren't importing elements and

then building television sets and then selling them. They were making all of this stuff piece by piece. This helped establish Korea as one of what was called the Four Little Dragons. The Four Little Dragons were nations in East Asia that were very rapidly expanding economically and technologically, and they also included Taiwan, Singapore, and Hong Kong, so these Asian countries were really quickly catching up to other nations like Japan and China. In nineteen seventy seven, Samsung began

producing color televisions and exporting them to Panama. So this was a humble step toward Samsung becoming a global player in consumer electronics. Before that, they had really been selling mainly to South Korea, but now they were expanding beyond that, and they were determined to really continue this level of

success with all different types of electronics. Around the same time, Samsung began to produce other products in consumer electronics, including air conditioners, which I have covered in previous episodes of tech Stuff and the microwave, and there is also a classic episode of tech Stuff about how the microwave works.

So I'm not going to go into a full explanation, but because this episode is going to be a lot about corporate politics and actual politics because of the complicated nature of Korean business, I thought why not go ahead and have at least a brief explanation on the science slash technology side of microwaves to really have this podcast earn the name of tech Stuff, because otherwise we're just going to be talking about lots of economics, politics, and

very complicated issues. So I'm going to give you some highlights of how microwave ovens work. So, the radiation micro waves. Microwaves are in the electromagnetic spectrum in between infrared and radio waves, so they are longer waves than visible light. Microwave ovens produce microwaves that a frequency of two point four or five gigaherts. That's two point four or five

billion wavelengths passing through a given point within a second. Now, certain stuff like fats, sugars, and water absorb waves that are at this two point four or five gigahertz frequency. As they absorb those waves, their atoms begin to get excited. That means they start to move around, and we call this heat. Right, if atoms are moving around a lot, they are warm, they're giving off heat, and they're giving

off that form of energy. Likewise, if you apply heat to materials, you start to make their atoms move around more rapidly. So stuff like glass, ceramics, and plastics do not absorb waves at that frequency. So if you were to put a glass like a glass container in a microwave and you turned it on and then you took the glass container out, assuming there was nothing on it

to heat up to absorb those microwaves. It should not be really any significantly warmer to the touch, So that's why the food in a microwave will heat up, but the containers do not. Metal, by the way, reflects microwaves, which is why the interior of most microwave ovens tends to be metallic. It's to reflect waves back into the oven in order to give the food a better chance at absorbing the waves and heating up and cooking in

the process. This is also why we say that this kind of food cooks from the inside out, and you're not applying any heat to a surface, so you don't get that seared nature you would get if you were to say, cook in a pan. One other thing, microwaves are not a form of ionizing radiation. That means that the waves don't carry enough energy to ionize atoms or molecules, or to simplify it even further, it means microwaves don't pack enough of a punch to strip electrons away from atoms.

Ionizing radiation includes stuff like ultraviolet radiation, X rays and gamma rays, and they do have enough energy to strip away electrons, and if you are exposed to that sort of radiation, you can suffer immediate and long term damage as a result. So in a short term, very brief exposure, you might suffer burns. In the case of ultraviolet radiation, it may take a little bit longer for you to actually suffer burns, but you know that's what sunburn is.

In the long run, you're talking about bigger risks like cancer, so you want to really minimize your exposure to ionizing radiation. But happily, microwaves are not in that category, nor are radio waves. It's the stuff in those bigger wavelengths. They don't have the energy to do that, which is why you shouldn't have to worry about microwaves or radio waves or anything like that causing you any harm. They just

don't have the energy to do that to you. Whereas X rays, gamma rays, that kind of stuff certainly has that sort of energy. Now, if you want to learn more about how microwaves work, including how they actually generate the microwave radiation in the first place, make sure you check out that Classic Tech Stuff episode. It is titled how microwave ovens Work. Yeah, we thought long and hard about that title anyway, that episode came out way back on March first, twenty ten. Let's get back to Samsung.

In nineteen eighty Samsung made another big acquisition. Remember that's how this company was really growing. It was buying up other companies and getting involved in as many different industries as possible. This time it was a telecommunications hardware company called hanguk Jinja Tungsen. The number one product the company made was telephones boards, so they were starting to install

more telephone infrastructure in Korea. Samsung soon expanded this to produce telephone and faxt systems and much later on mobile phones. More on Samsung's mobile phones. A bit later, Samsung expanded the operations of its electronics division into other nations, including the United Kingdom in the US, and the company had become an empire. And that's when it lost its emperor. It was nineteen eighty seven and Li Biongchol, who was the man who founded Samsung when he was just twenty

eight years old, passed away. Now, if you listened to our last episode, you know he had come from a wealthy family to begin with, but his company had elevated him and his family to truly wealthy status billionaires. Now at the time of his death, he had one of the largest private collections of Korean art in all of the nation, which was opened up to the public after his passing. He had ten children, six daughters and four sons.

There were also rumors of him having other children with other women besides his wife in Korea, but that was a rumor. That the family is very secretive in the first place, so it's not like this was necessarily open information. Now, at the end of this podcast, I'm going to trace the very complicated history of Lee's family. I'll do this because in Korea it is still traditional for families to keep control over businesses, so you can inherit a position

of leadership in a company. The world of board of directors and choosing a CEO isn't the way things are done in Korea, at least not for a lot of companies. They follow a more traditional pathway and that has caused some consternation. As it turns out, now the company split into four major business groups that eventually became their own individual companies, and at least according to the people running those companies, have nothing to do directly with one another. Anymore.

Those include the Shinsegae Group or Shinsega I guess group, I should say, which is mostly concerned with retail businesses, you know, department stores, that kind of thing. There's the CJ Group, which includes businesses in food, chemical, entertainment industries. There's the Hensall Group, which includes telecommunications and paper manufacturing industries. And then you have the Samsung Group, which is pretty

much everything else. So for right now, the only important thing you need to remember is that Lee byungchal, the founder of Samsung, died in nineteen eighty seven, and I'll try to focus exclusively on Samsung Electronics from here on out, though I should mention the company as a whole consisted of eighty smaller companies at one point or another, eighty. It was a really a conglomerate in the true sense

of the word. It was a company filled with other companies. Many, in fact, most of those companies had nothing to do with consumer electronics. In the late eighties and early nineties, Samsung Electronics began opening manufacturing facilities in different parts of the world. The company was really making a name for itself,

becoming a global player in the electronics space. This is pretty remarkable when you remember that companies like Sony had been in the electronics industry for decades, whereas Samsung really only began to dive into it in nineteen sixty nine nineteen seventy, so they had a lot of catching up

to do. Samsung continued to expand the types of electronics it produced in the nineteen eighties, like I said, with air conditioners and microwaves starting off, but by nineteen eighty three the company also began to get into the personal computer business. The very first Samsung computer was the SPC one thousand, which came out in March nineteen eighty three, and it was an eight bit personal comput which looked more like a giant electronic typewriter. It had sixty four

whole kilobytes of RAM and before megahertz processor. Yeah it was. From the time it was, you know, it was good, but by today's standards it is it is almost laughably underpowered. But we have Moore's law to thank for that. The computer included the keyboard, a game pad, external disk drives, and a TV like monitor and you would hook them all up and then you'd be able to run stuff using the DOS operating system. Good times in nineteen eighty four,

Samsung began to export VCRs to the United States. And I've covered VCRs in the past, including a deep dive on the format wars between VHS and Betamax, so I'm not going to really dive into it again. Here you can listen to that classic episode of tech Stuff if you like. And in nineteen eighty six, Samsung created what was then the smallest videotape recorder, a four millimeter videotape recorder.

By the end of the nineteen eighties, the company's products could be found on store shelves around the world, so they really made rapid progress. From the mid seventies up to the late eighties, TVs were still leading the way, with Samsung's twenty million color television produced in nineteen eighty nine. The company developed its first mobile phone handset in nineteen ninety one, though it would continue to work on the

software side and the systems side for another year. By nineteen ninety two, Samsung had become the global leader in producing memory chips for electronics, so essentially RAM and it fell only behind Intel for chip making in general, so Intel was the number one producer of computer chips In nineteen ninety two, and Samsung was number two, again, a remarkable story for a company that had only recently started

to get into electronics at all. Samsung pioneered work in building LCD display in the mid nineties, and if you listen to my history of TV series, you know that the LCD panels really helped push televisions into a new era, allowing for a thinner form factor in flat screen TVs. Samsung Electronics would end up making millions of dollars by licensing LCD panel technology to other companies that became a chief source of revenue for the for the Samsung Electronics division.

Also in nineteen ninety two, Samsung began manufacturing in China and producing computer components such as RAM and hard disk drives, with a two hundred and fifty megabyte drive released that year, which again sounds like nothing at all. Two hundred and fifty megabytes. I mean, you can get multi gigs on a single flash drive these days, but back then it

was pretty impressive. Samsung was also producing industrial robots at this time and managed to hit the ten million products shipped by the end of nineteen ninety two, and by products, i'm talking specifically robots they produced ten milli billion industrial robots by the end of nineteen ninety two. That's pretty incredible. Now, I've got a lot more to talk about with Samsung's electronics, but before I dive into the next section, let's take

a quick break to thank our sponsor. In nineteen ninety three, Samsung's Advanced Institute of Technology, also known as SAIT or SAT, developed the first digital versatile disc recorder or dvd R device. I guess I mean it couldn't have been the DVD we all know, because that didn't exist in nineteen ninety three. That wouldn't be introduced until nineteen ninety five as a joint project between Sony and Panasonic. Honestly, I'm not really sure how Samsung's device fits into the history of DVDs

and dvd rs. In particular, I found the entry that the company first produced this first DVD R in nineteen ninety three on Samsung's actual website, so this is according to the company itself. But that really strikes me as strange because as far as I know, the standard didn't really exist until nineteen ninety five. So how do you produce a product two years before you've figured out the standard.

It's possible that the entry is erroneous, but it did come from Samsung itself, so I thought it would include it, so, you know, grain of salt. It may very well be that they produced a DVDR on an early version of what would become the standard in ninety five, but it just seems a bit early to me. Totally possible, just something that I did not hear about when I was researching DVDs years ago. In the mid nineties, Samsung products began to number on the top sellers for certain categories

like LCD screens. Samsung was definitely leading the way there. Meanwhile, Lee kun He, who was a son of Li b yung Chol. Remember I said Lie Byung Chol had ten children. Well,

Lee kun He, the third son. He would join the International Olympic Committee in the mid nineties, and that move is really important to note because it illustrates how critical a role Samsung was to the country and economy of Korea, and it also showed how critical the Lee family was and how strong their political influence was at the time. I have a lot more to say about that. Toward

the end of this episode. In ninety four, Samsung unveiled the first four power zoom camera that came from Samsung Aeronautics, and in nineteen ninety five, Samsung launched the Samsung Entertainment Group. That same year site you know sait showed off a real time MPEG three technology. And then there was a

story from that same year or around ninety five. I guess that Lee Kunhe, who again was the head of Samsung Electronics at that time and in fact still is today, ordered an entire your inventory of smartphones destroyed because they

apparently did not work properly. So the story was that an early smartphone really an internet connected phone, it wasn't a smartphone the way we would imagine today, didn't work properly as it came out of production, and so rather than trying to fix the inventory, leekhen He just ordered

them all to be burned. Samsung obviously didn't give up on the mobile business, and in fact, eventually the mobile business would become one of the most profitable divisions within the country the year twenty sixty notwithstanding, and in nineteen ninety six, the company produced what it claimed to be the fastest central processing unit chip, the fastest CPU. They called it the Alpha. In nineteen ninety seven, South Korea, along with countries like Indonesia, Thailand, and the Philippines, were

all caught in a terrible financial crisis. It began in Thailand with the collapse of Thailand's national currency, and that created a sort of ripple effect, and South Korea was caught in it. In fact, you could argue caught some of the worst of it, with national debts surging as a result. Samsung was affected by this problem just like other companies were, although Samsung was in good position to be able to weather the storm better than a lot

of its competitors. According to the company's website, Samsung reduced the number of affiliated companies to forty five, which is still an enormous number of affiliates, right, I mean, that's a big conglomerate, and keep in mind this is family owned businesses. The company ended up laying off about fifty thousand employees and sold ten business units. And one of the businesses Samsung sold off was its motor vehicle business or it used to be Samsung Motors, but the company

sold off its interest to Renault at a big loss. Renault. Samsung is mostly owned by Renault, like eighty percent ownership and less than twenty percent of that ownership falls to Samsung. In the late nineteen nineties, Samsung began to produce larger LCD screens and they ushered in a new era of large flat screen televisions and monitors, and they also started mass producing digital televisions. The semiconductor branch of the company was busy creating RAM and flash based chips, and in

nineteen ninety nine, Samsung launched a smartphone. This would be a true Internet capable mobile phone handset. But keep in mind again, nineteen ninety nine smartphones are not the same thing as the smartphones of today. You're still talking about pretty simple form factors, not the big touch screens that we think about when we use smartphones these days. Now, the turn of the millennium, you know, around two thousand, Samsung got into the HDTV game. High definition television was

still pretty young. I mean, it had been pioneered in the nineties, but two thousand was when consumers were starting to really look at HDTV for the first time in a serious way, and Samsung was able to secure a spot among giants in the industry like Panasonic and Sony. Samsung Television's remained one of the top brands on the market, so it's a real triumph for the company to get their products right next to these other big name brands, considering that they had a much much shorter history in

the consumer electronics field. Through sheer willpower and lots of investments, they were able to do this. By two thousand and one, the company's subsidiary, Samsung Techwin would become the supplier for engine parts for the Airbus A three eighty and for the Boeing seven eighty seven, so they also were doing a lot of business to business deals. In two thousand and five, Samsung became the largest producer of LCD panels globally.

The following year, two thousand and six, Samsung and Sony he formed a deal in which Samsung would supply Sony with LCD panels, and this partnership was almost fifty to fifty, almost Samsung owned one share more than Sony did, and in twenty eleven, Samsung would buy out Sony's steak in this partnership and take over the business completely. As for the mobile phones, Samsung really joined the fray in twenty ten when it launched the Galaxy S that was its

first flagship Android phone. Since that time, Samsung and Apple would engage in numerous court battles around the world over various patents and designs, with each side accusing the other of copying the first one. So Apple would say Samsung copied us in this way, Samsung would say Apple copied us in this way, and these got really complicated and enormous. We went into some detail of the story in an episode called The Past in Wars, which came out in

twenty eleven, but obviously those have continued since then. Samsung also manufactured the first popular consumer tablet running on Android in twenty ten. That was the Galaxy Tab, and it began to experiment with smart televisions. Those are TVs that pull in content directly from the Internet. You probably are familiar with the many of you may have a smart TV. I your humble host, am still falling behind the times as my TV is not smart, but I got a

lot of smart stuff connected to it. Anyway. In twenty twelve, Samsung actually overtook Nokia or Nokia if you prefer it's definitely not Nokia as the number one production company for mobile phones. So this is a big deal for Samsung to overtake the giant Nokia in twenty twelve. The company is a true powerhouse in Korea. It accounts for it almost fifteen percent of the gross domestic product in Korea

back in twenty twelve. And in case you're rusty on your economic terms, gross domestic product refers to the total value of goods and services originating from inside a country within one year. So Samsung's business accounted for fifteen percent of all of Korea's GDP in twenty twelve. That is enormous. There's no company in the United States that comes close to that, and the overall company has an employee base of nearly half a million people. Huge, huge, huge company.

Now they now focus on just a few core businesses, which include mobile technology, electronics, and biopharmaceuticals, among a couple of others. It really is big. It is the third largest company in the world by revenue, and it holds more US patents than any other company. It's also involved in emerging markets, including stuff like virtual reality and wearables. Oh and there's some notable stories about some of the Samsung products that are out there. You know, some things

that suffered a couple of issues. Let's talk about the one that I bet you already know I'm referring to it is, in fact, the Samsung Galaxy Note seven. This phone became infamous after more than one hundred of the handsets were reported to have burst into flames. So what happened, Well, the phones have lithium ion batteries, and lithium ion batteries are flammable. That's why you're not supposed to put any in your luggage that you're gonna store unless you're going

to check. You know, when you go to an airport, you don't check bags have lithium ion batteries in them because of the potential danger for fire. So what can happen is a short circuit can create this dangerous situation. And a short circuit is kind of what it sounds like. It's when you create a shortcut in a circuit and electrons can flow. The can follow the shortcut rather than

the path you want them to follow. So the basics of electronics is this, we harness electrons to do what we want them to do, and we do it through making all these different pathways and gates, and as long as we've got that working, the electrons can only follow the gates and go through the gates that are that we allow them to go through, and they don't go through the ones we don't allow them to go through.

Our electronics work. But if we create a shortcut so that electrons can jump from one pathway to another directly, then we have a problem. Electrons will take that path of least resistance, no pun intended, and as a result, it starts to heat things up. You've got this extra energy being given off in the form of heat. So with batteries, if there's a puncture between the positive and negative electrodes, you can have a direct change of electrons

and the material will start to heat up. Well, Lithium ion batteries are really flammable, so if they heat up enough, they'll burst into flames. Originally, Samsung tried to address this problem by replace batteries, but they received reports of several replaced handsets also catching fire, so the company was forced to issue a full recall on the device, or rather they did issue a full recall before the force thing

became a real necessity. Meanwhile, you started seeing representatives at airports telling travelers that they had to surrender any Galaxy

seven phone before getting on a flight. It was really bad PR for the company, and Samsung is still kind of dealing with that to some extent, although it's already starting to slack off a little bit because now we've got the Samsung Galaxy S eight coming out as I record this podcast, early reviews are coming out about this new phone, and most of the reviews I've seen have

been generally positive. The new phone has a twelve megapixel camera on the back and an eight megapixel forward facing camera, and Samsung has introduced a personal assistant similar to Siri or Alexa called Bixby, which I think is kind of adorable and it also the new phone has an iris scanner so that you can use that for authentication. You can go totally James Bond with your phone. That's pretty cool.

So the company is still producing these gadgets, not like they've backed off after the problem with the Galaxy seven, but that was really bad PR for them. I should also say that before I get into the next section, which is largely about the behind the scenes at Samsung and the incredibly complex political struggles within the Lee family, that Samsung makes some awesome products. I have several Samsung products myself, So while I'm going to talk a lot

about some of the controversies behind Samsung. I don't want that to come across as me slagging the company as a whole. I think that there are a lot of really good Samsung products out there, but it is really fascinating to take a look at the family behind the company and their relationships with one another. Because you know, this is some game of throne stuff, and I'm not kidding. You should probably grab some popcorn and I'm gonna take a quick break to thank our sponsor. Let's get back

to Lee Byung Choll's legacy. His is a complicated story. I talked about him a lot in the last episode and about his dreams for Samsung and how he wanted his company to be a contributor to Korea's economy and help the country create an industry of its own. But it's not as simple as that or as heroic. Necessarily, there's some complications to the tale. He was really intent on the success of his company even as you saw

regime changes. He even led Samsung from Japan. He was in Japan when there was the coupdata where Park Chunghi, the military general, took control of of the Korean government. This was partially because lib Byung chung had developed a beneficial relationship with the former leadership of South Korea. You know that US backed president that was in charge of

South Korea before the coup. Data, Well, Yung Chull was buddy buddy with that president and had worked very closely in order to ensure Samsung's success and the growth of the Korean economy. So some would argue that perhaps this was evidence of corruption, that perhaps Samsung had been buttering up the Korean government or preferential treatment. So because there was a coup a'tah where one regime was replacing another,

that put Yung chul in a delicate situation. Also, according to at least some journalist reports, although I have not been able to completely verify this, he was in Japan at the time, staying at the house of his Japanese wife. Back in Korea he had a wife as well, a different one at the same time, So according to this journalist, he kept two households, one in each nation and was practically open about it, or at least didn't go to

great links to hide it. Again, according to the journalist I was reading, but he did return to Korea after he was given assurances that he wouldn't be put on trial for corruption charges, and again, to be fair, those charges wouldn't necessarily be accurate. You know, Samsung had flourished under that previous regime, and now you had a new regime in place, and that new regime is trying to wipe out everything from the previous one away, trying to start with a clean slate. So it was a tricky time.

You could argue that perhaps there was some evidence that he had colluded with the president, or maybe it was just that, as the story goes, that he was trying very hard to make Samsung a power player in the East Asian economy. Now, General Park Chunghi gave Samsung some preferential treatment that really is beyond question, and also a few other Korean companies received this kind of preferential treatment.

This was in order to encourage an era of industrialization and modernization, but the government made out pretty well too as a result. So from one point of view, you could argue that Samsung had managed to nuzzle up to one leader then turn around to get buddy buddy with the next one in order to maintain its advantage. But from a different point of view, you could say Samsung was able to lead the charge in bringing Korea up to speed with the rest of the industrialized world in

a very short span of time. So again I'm not trying to demonize Li b yung Chol, but I'm also not shying away from the fact that this is complicated. Now, in nineteen sixty seven, Lie byung Chung had to officially resign as chairman of Samsung. This was due to a charge that his second son, Li Changhi, had been smuggling

saccharin into Korea. So this scandal breaks out, Li byung Chung, as part of this news break of his second son being part of a smuggling operation, announces that he will step down as the head of Samsung Group, and thus control of the company passed, as is tradition in South Korea to the eldest son that was Limanghi. Now, keep in mind, Samsung Group is a company of companies, and

we're talking around eighty companies at this point. But found under Lee byung Chol still had the power to choose which of his children would officially lead the company after his death, which is common in Korea. Leadership can remain within a family and Biungchol watched as his eldest son mag he began to alienate the leadership of the various divisions within Samsung, and in fact, according to some reports, he had even written that within six months he had

plunged that upper echelon of executive leadership into chaos. There were a lot of reports that Monghi was short tempered and ill suited for leadership. Meanwhile, Biong Chol's second son, changhe tried to position himself into a power position despite his previous scandal of smuggling sacrin by talking to the President of South Korea and revealing that byung Chol had some slush funds that he was hiding from the government,

presumably for bribery and other purposes. And this is the point where we should really just be humming the Game of Thrones theme and probably just keep it up for the rest of the episode. So Bijung Chol made a decision at that point that the ownership of the Samsung group would not go to either of his first two sons because he felt that they were both plotting against him and would be a bad fit. So instead he

decided that we should go to the third son. Now, as you can imagine, this did not exactly go over very well within the Lee family. So in nineteen eighty seven, when Byung Choal passed away, the control of his company went to his third son, Lee Kunhi. Now, Samsung itself is what is called a chebol, which is an institution peculiar to South Korea. Essentially, at Chaebol is a large conglomerate of businesses that more often than not fall under

a single family's ownership and leadership. And it can get really complicated and be really dea and difficult to suss out who owns what percentage of which company, so you can make a lot of arguments as to whether or not things are on the up and up. Well, Lee Kunhi became the head of Samsung Group, and individual businesses and divisions fell under the control of some of his siblings.

You might remember I mentioned earlier that Samsung Group kind of broke into four major components at this point, well, those components went to other siblings. One of those was Lie Monghi. He ended up taking control of the CJ Group.

You remember I mentioned that earlier. Well, later on much later on, like in twenty twelve, Lee Mong he and one of his sisters would go on to sue Lee Kunhi and Li Monghi was accusing his younger brother of hiding shares from the company after their father's death, and that it would last couple of years, only coming to a close in twenty fourteen when Soul's High Court upheld a verdict that said Lee Kunhi was innocent of that.

Really more, it was more about how the claim of any sort of claim you would have or inheritance would have expired after ten years had passed from the death of Jung Choal and Young Chal died in nineteen eighty seven, so by twenty twelve it was far too late. But that's not the end of the animosity within the Lee household. It actually gets very complicated. So one of Bjung Chol's daughters still second generation here, her name was Lee Sok

still is Li Sok. She married into another family in Korea, another prominent family, the kium Sung family. Now the Kiumsung family is the head of another chabol namely l G, and as LG's electronic business began to flourish, this put a brain on relations between the kyum Sung and Lee families, so that created some more tension inside the family. Now getting into the more complications in this web of relationships that were tested after Byung Chol's passing, I need to

talk about some of the other folks. Lee Chang Hi founded a company called Sehan, which was an electronics and textiles company. Also made one of the first MP three players called the MP Men. Chang Hi would pass away in nineteen ninety. I think he was the first of Byung Chol's children to pass away, so he only you

know he lived only three years after his father. Well, lie In He one of Byung Chol's daughters, another again second generation here, became the leader of Samsung's home furnishing businesses, and another one of the daughters, Lie Munghi, would end up leading Sam Sung's retail businesses. Both groups of businesses would split off from Samsung. The home furnishing business split off in nineteen ninety one and the retail business split

off in nineteen ninety seven. I've got some more to talk about with Samsung once we come back from this break. To thank our sponsors, So Lee and he founded the Hansall Group, which is an electronics production company in paper manufacturing business and according to Hansaal they have no connection with Samsung Group at all, that there's no ownership connection

between the two. Lie Mjunghi would go on to found the Shinsegay Group that was the department store franchise in South Korea, and both of them are very powerful leaders in Korea's economy. Then you had CJ Child Judan, which is a business that sells all sorts of stuff including food and biopharmaceuticals. Lie Maghi, the eldest of Biong Chul's sons, led this company and then passed it on to his son, Lie jay Hun. So Lee jay Hun is third generation.

He's a grandson of Biyeung Chung. Lie jay Hun led c J Child Judang until twenty fourteen, and then he was convicted of charges of theft and embezzlement and sentenced to four years in prison. He would not be the only Lee to be accused of and convicted for charges such as these. In nineteen ninety six, in fact, Lee Kunhi he's the guy again the third son of the

founder who would taken over control of Samsung Group. He was accused of and convicted four charges of paying bribes to Chundu Huan that was the general who took over after Park Chunghi's assassination. So du Huan was a president of Korea. South Korea and Lee kun He was convicted of charges of bribing the government. He also was accused of bribing the successor to Chundu Huan, who was Rot Taiwu. So nineteen ninety six was a bad year for Lee kun He. He had these charges of bribery for two

of South Korea's recent presidents. But in nineteen ninety seven, the then president of South Korea, Kim yung Sam, this was the next successor, granted, couldn't he a pardon? So kunn He gets a presidential pardon in nineteen ninety seven after being accused of bribing the two previous presidents. By the way, at this point, Korea had entered into what is called the sixth Republic, which is what it currently is in Koreas. In the sixth Republic, the third and

fourth Republic were Arc Chunghi's presidential administrations. I guess you could call it. And then you had the fifth one with du Huan and Taiwu. All right, So, Kim Yong Sam also pursued charges of corruption and treason against his predecessors, du Huan and Taiwu. So the president who granted the pardon to Samsung's Kunhi, President of South Korea, also went after the two previous presidents of South Korea, but then eventually, after having them both convicted, would grant them both a pardon.

So Samsung's politics are confusing, but so are Koreas, right, because you had a current standing president accuse and convict two former presidents of corruption charges and then grant them pardons. Complicated stuff, all right. So Samsung's Kunhi gets his pardon in nineteen ninety seven for those bribers recharges. Then he goes back to managing Samsung. He has a son, and he had three daughters, all of whom attended school in

the United States. His son, Lee ja Yong also known in the West as j y Lee, assumed control of fourteen internet venture companies, but they went out of business within a year. So that didn't exactly instill a lot of enthusiasm because again, the way Samsung operates, the way Korea businesses operate, especially in this old family tradition, Jay Lee stands to inherit Samsung. His father Kunhee is the current leader and would traditionally pass it down to his

eldest son. Well, Jay Lee is the only son of Kunhi. Kunhi's daughter, Lee Yung Jung, is the subject of a really tragic story, and he may have heard about this because it was big news when it happened. When she was twenty six years old, the heiress to the Samsung fortune hanged herself in a New York apartment building. Her death was international news. She was the daughter of one of Korea's wealthiest men, and in Korea, her death was

originally reported as the result of a car accident. She had an avid interest in race cars, and people knew that about her, but according to some people close to her, she was also prone to bouts of loneliness and depression, possibly because she had hoped to marry a man she had fallen in love with back in Korea, but she had been told by her parents that the man was not of the right stature for her to marry, and

they forbade her from marrying him. Now, the true story that led to her suicide is probably not fully known, and I'm sure is far more complicated than that simple answer, but it was a shocking and tragic that made world headlines. In two thousand and eight, Lee kunhe was accused of and convicted for tax evasions. So ten years after, a little bit more than ten years after his last conviction, he gets accused and convicted for another set of crimes.

The charges said he failed to pay forty five million dollars in taxes and he was hit with a fine that was nearly ninety million dollars. As a result of the scandal, he was forced to resign as chairman of Samsung. That put his son, Jay Lee's claim in danger, actually because since he had to step down, there was the question of whether or not he would be able to pass along the ownership of the company to his son.

But then in two thousand and nine he received another presidential pardon for giving him for his conviction of tax evasion, and in twenty ten he reassumed leadership of Samsung Electronics. All right, let's get back to CJ Group, which again spun off from Samsung in the early nineteen nineties. This was the part of the company that dealt with food and biopharmaceuticals and later got into the entertainment business, forming

subsidiaries like CJ Media's CJ Entertainment and CJ Internet. Lee mong He, remember he was the eldest son of the founder of Samsung. He had a son, Lee jay Hun, you remember I mentioned him earlier, who became the head of CJ Group in two thousand and two. So this is a Samsung founder's grandson. Lee jay Hun would be grandson to Byung Choll, the founder of Samsung. Anyway, in twenty thirteen, Lee jay Hun was arrested on charges of tax evasion and embezzlement, so you might be sen sing

a theme here. He would also eventually receive a pardon from the president in twenty sixteen. As for mong He, the eldest son, he passed away in twenty fifteen, the second of Biongchull's children to pass on. Now, of course, this is not where the story ends. You have probably heard about a scandal that is sweeping South Korea that hit worldwide news in twenty sixteen. It is often referred

to as the Choice Sunsil scandal. Samsung is caught up in that as well as lots of other companies and entities. So what is the scandal all about? Oh boy, I hope you still got some popcorn. Here we go well, as you've no doubt gathered from this and the previous podcast.

Korea's government has had a real rocky time since World War Two and even before that, with several leaders doing their best to maintain a position of power beyond what we're supposed to be legally binding protections for the Korean people. Many Korean leaders have been involved in various scandals that revolve around bribery and corruption, and honestly, I think it's impossible to really lay blame here because the nation of Korea has been the subject of so much interference in

international intrigue, but this particular scandal really stands out. Choi Sunsil is the name of a woman. She was the daughter of a man named Choi Thai Minh. Thai Minh was the head of a sect of South Korean Christians. He was formerly a Buddhist and converted to Roman Catholicism, and some people call his group a cult. I do not know enough about it to give it a term, but he'd certainly led a sect of religious followers in

South Korea. He became friends with and a mentor to a woman named Park Gun Hey, and I know I'm butchering her name but she was the daughter of Park Chunghi, the military general who became the dictator of South Korea for many years for the Third and Fourth Republics of Korea. Now Park Gun He was elected to the position of president in twenty thirteen, and she was friends with Choice Sun Sil not time. Men had passed away in the nineties, but his daughter Sun Sil remained very close to Gunhi.

In twenty sixteen, it became public knowledge that there were a string of accusations and arrests that were flooding the South Korean government, many of them targeting the people around the president herself, and the story unfolded that Sun Sil had been using her considerable influence over the president to create favorable deals for herself and her family and her friends, and that many government officials have been accepting numerous large

bribes from lots of businesses, including businesses related to Samsung. This scandal has rocked South Korea. The president has stepped down, she was impeached. She stepped down from the role of president. The Prime minister took over. But as for Samsung, this led authorities to go investigate Jay Lee, whom I hope you'll remember, is Kunhe's son and therefore a grandson of the founder Jung Chol So. Jay Lee was serving as vice chairman for Samsung Electronics. He's essentially the heir apparent

to Samsung. He was accused of bribery, among other things, and was arrested in January twenty seventeen. The accusations include one that says that he made sizable contributions to the tune of about thirty five million dollars to two nonprofits that Choi Sunsil allegedly controls Now the story is still unfolding at this time of the recording, and so the future of Samsung leadership remains an open question. It could turn out that it has merit and that Jay Lee

will be convicted of these charges. It could turn out that we see yet another presidential pardon come out and absolve him of these charges. Who knows. One possible successor to the Samsung empire could be Kun He's daughter, Li Bu Jing. She is sometimes referred to as Little Kunhi by the Korean public. She's the president of Hotel Shila and co president of Samsung Everland, which is a company that oversees Korea's oldest amusement Park under the umbrella of

Child Industries. Now, if you listen to part one of the Samsung story, you might remember I mentioned Child Industries in that episode. It started off as a very humble business. It was a woolen mill back when Samsung first was diversifying in the mid twentieth century. Well, Li Bujin's sister, Li SiO Hyun is the other co president of Child Industries, so the two sisters sit at the top of that company.

There was also a recent story where in an effort to streamline things, there was a plan to have Child Industries acquire Samsung C and T. So that's not the overall Samsung company, it's the construction and transportation company that was part of Samsung. But Paul Singer, who is an investor with more than seven percent ownership of stock and

Samsung C and T, blocked that plan. He led a charge to block it, saying that he felt that the nine point four billion dollar stock offer was undervaluing Samsung CNT and that shareholders wouldn't be paid a fair amount for their ownership. That caused some headaches over on the

Samsung side. For the leadership for the Lee family, I suppose I should say shareholders have pressured Samsung, trying to get them to change to a more traditional holding structure, you know, like with a board of directors and that sort of thing. Many other chabels in Korea have given up the ghosts, they have disappeared, They got broken up by the government and dispersed and turned into more traditional

Western style corporations. But Samsung's Lee family has not followed suit, and they have been putting up resistance to this and have said that it's completely unnecessary and in fact would end up more harm than good. That's their claim. So you could say they are disinclined to acquiesce to such pressures. Well, that concludes the Samsung story at least as far as twenty seventeen. I need to check and see if I've done an update since then. I don't remember doing it.

But then I publish a lot of episodes, y'all. I cannot remember what I published two weeks ago, let alone you know, three or four years ago. But I think it may very well be time to do an update to that if I have not already, So I'll have to search the archives and see and if I haven't done an update, that has gone on the list. I hope you enjoyed this classic episode, and I'll talk to you again really soon. Tech Stuff is an iHeartRadio production.

For more podcasts from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or wherever you listen to your favorite shows. The e