Art and empire are proliferating as Samsung’s Lee family faces $ 12 billion in inheritance tax bill

Jean-Michel Basquiat, a black boxer who produced African sculpture and racial discrimination as a source of inspiration in 1982, produced “Untitled (Black Image)”, one of the masterpieces that broke new ground in art.

In the same year Lee Kun-hee Samsung focused its efforts on mastering how to transfer millions of metal oxide semiconductor transistors to a single computer chip, a new process that would help drive tremendous advances in new technologies.

While the American painter and Korean industry who died in October 2020 were worlds apart, they have been inextricably linked. Basquiat’s striking fabric Lee’s wife and three children are among the chat houses on large estates when they are considering separation, while making plans to pay a $ 12 billion inheritance tax bill.

60% of South Korea’s inheritance tax is OECD law, the highest in the OECD, which reveals a rapidly growing rift between the country’s ultra-rich and ordinary citizens.

“Society has benefited them from becoming so rich,” said Chang Sung-ja, a 56-year-old man from southern Suncheon who, with her husband, takes people home after drinking. “People like us can’t even imagine the amount of their wealth.”

Lee, the son of Samsung’s founder who ran the largest company in South Korea, has long been revered as a helmsman who has been successful in helping a nation emerge from the ashes of a cruel war and become a technological powerhouse.

Today, for many South Koreans, the wealth of Lees – and others chaebol families that dominate the business landscape of the region and have great political influence have become divisive. The lives of elites with privileges and abuses are in stark contrast to the constant struggle of most of the workers who are constantly struggling.

Although the tax period is about to arrive, neither the family nor Samsung have commented on how the tax will be paid – in addition to stressing that the money owed to them will be accounted for in full and on time in a private manner. January imprisonment Lee Jae-yong, the son of the chair now run by Samsung, has become even more complicated by the family’s public relations problems due to bribery related to his succession.

According to analysts and commentators, the scenario is likely that payments will be spread over five years under a complex structure that will reshape the family’s fortune.

Park Ju-geun, CEO of Score, the head of the research company, said he expected the initial payments to be made through large bank loans, using Samsung unit shares as collateral.

Given that the wealth of the deceased patriarch is tied to a network of stakes in Samsung group companies, the different units listed are expected to pay higher dividends to help improve the family’s coffers.

But by the end of the five-year period, the family will likely have to dissolve some of its stakes in Samsung companies, a solution that increases the risk of unleashing its iron grip on the conglomerate.

According to the park and other people familiar with the situation, it is debatable whether to restructure the family’s interests through the sale or donation of the art collection and charitable foundations. The collection, valued at $ 13,000 and valued at $ 2.7 million, includes works by Pablo Picasso, Andy Warhol and Mark Rothko, as well as works by Korean artists Park Soo-keun and Lee Jung-seob.

Chung Joon-mo, head of the country’s art evaluation center and former curator of the National Museum of Modern and Contemporary Art, allows for tax improvements if the artwork is donated to state-run museums.

“They’re already talking to museums and have almost made the decision,” Chung said, adding that the donation will be welcomed given the “limit on the purchase of expensive artwork with state budgets”.

Others, however, are against the family for lowering the art donation tax bill. “Why can’t they pay the bill in cash? They have a lot of money, ”said 55-year-old cleaner Im Han-kyu.“ That wouldn’t make much of a difference because they make money in their lives. ”

Inheritance tax regimes vary around the world, but it is the highest rate in South Korea above end of scale internationally.

The Lee family’s tax problems are part of a broader change that has been launched, as inheritance and inheritance struggles threaten to transform markets in some parts of Asia.

In Japan, for example, generational changes in ownership and control of the company are being pushed rising private equity interest which has raised the largest funds to set up shop in Tokyo in the world.

Not only is Japan’s most important economy aging, it also has the largest concentration of start-ups looking for a structured exit from the businesses that reached the end of the 70s and spent decades building.

The profile of companies and their executives is key to this boom, as private equity firms believe that eventually different economies, such as South Korea with Japan’s demographics, will be repeated across Asia.

However, back in Seoul, Samsung still has a strong supporter. People, from employers to monks, have called for Lee Jae-yong to be released from prison in recent days through a presidential pardon. The family hopes that donating works by artists like Basquiat will remind the public of their contributions and give recognition to the third generation of Lee’s leadership.

Additional report by Emma Agyemang in Copenhagen