Samsung's Family Feud

During his long and controversial career, Samsung Electronics Chairman Lee Kun Hee has transformed his family’s dried fish and produce company into the world’s biggest maker of televisions and mobile phones, besting Sony and Apple in the process. Now he must contend with rivals closer to home: his siblings. Billionaire Lee, 70 years old and South Korea’s wealthiest citizen, is facing down lawsuits filed by his older brother and sister. They hope to win a chunk of the stock that allows Lee to control the sprawling Samsung Group of companies, which logged $237 billion in sales last year.

Their late father, Lee Byung Chul, founded in 1938 what is today South Korea’s biggest business group, generating about 20 percent of that nation’s gross domestic product. Samsung controls more than 80 companies that make everything from armored vehicles and artillery guns for South Korea’s military to oil tankers and household appliances. The siblings’ demand that Lee Kun Hee hand over at least an $850 million stake in the group threatens to be a distraction at the worst possible moment. It also could complicate transition plans for Chairman Lee, whose son, Lee Jae Yong, has already been made chief operating officer of Samsung Electronics. (Update: On June 7 Samsung Electronics named Kwon Oh Hyun, head of its display and chip business, as chief executive officer. The younger Lee remains COO.) Chairman Lee “has grown Samsung to the point where Korea is called ‘Republic of Samsung,’” says Park Hyun Goon, author of Lee Kun Hee’s Agony, a book about Samsung succession published this year. “How would it make him feel if a share of that is taken away by his siblings or if his company goes down?”