Accordingly to my Korean colleagues, he has been in a coma since 2014 and has been just the chairman in name. There are no pictures of him after 2014.

Yikes - I looked and there are rumours from 2015 that this was the case. https://www.koreaobserver.com/lee-kun-hee-dead-alive-health-...

According to many he’s been dead since then, and his heir has just been trying to keep it all hidden because SK’s inheritance taxes could threaten the family’s majority stake in the business.

So is this the heir "buying the dip"? Staging the death at the moment in which the inheritance is likely to have the lowest market value?

In the UK if you get a (sizeable, asset) gift from someone and they die within a certain number of years you then need to pay inheritance tax on it. Could be the same mechanism here? Date has passed so turn off the ventilator or whatever?

Regardless of what you think of the conspiracy theory, they've had quite a long time to plan what they do next, so you'd presume they had something figured out.

Precisely.

It's quite amazing how some pieces of conspiracy is so readily accepted while some others are vehemently denied to the point where people are sent to jail over it.

It’s a rumour that would have been easy to disprove if he was well.

What would be the benefit of disproving such a rumour? No company is going to turn down business with Samsung either way, while a public showing that you are fit may contradict your lawyers in their (current or near future) attempts to dodge subpoenas.

This reminds me of this tweet:

https://twitter.com/oniontaker/status/1214540491577942017

Wow - "Enter Korean tax code. Korea has 50% inheritance tax on assets above $2.5m. When Lee Gunhee dies, his family will owe the government $7b. The family will have to sell personal stakes of Samsung-controlled assets, weakening the strong, complex investment structure they built."

That's pretty impactful in terms of potentially forcing the family to sell off control, isn't it?

I don't think that's the right way to think about this situation. The fact that Lee Kun-Hee is dead means that the family's efforts to restructure the company, consolidate power, and offshore assets is complete. Elliot Management called out Samsung five years ago for malfeasance but their efforts were stymied by a government led by the former disgraced president, Park Geun Hye.

If the theory is true, then the fact that they're announcing his death now means that they've finally put themselves in a position where they can pay the tax bill without giving up control of Samsung.

I'd expect them to be able to finance paying the taxes with an equity collateralised loan. If not the entire tax bill, at least a big chunk of it.

Seems that more leverage and more debt is in fact the answer to everything. BRB, need to take a second mortgage to buy more equity index funds. I will then use the fund shares as a collateral for another loan, and you get the idea. I wonder why hasn't anyone thought of it yet! Time for a YC application!

“Debt is morally wrong” is a useful heuristic in the context of working class people, consumption spending, and delayed gratification. In the context of the tax and liquidity challenges of the ultra-wealthy it’s just a tool.

It's only stupid if it doesn't work!

You jest but it could work out. Samsung has more than doubled their share price over the last 4 years. Tripled over the past decade. Additionally you have to consider that retaining the shares may be critical to maintaining control over Samsung. So that would be worth a certain premium. There's still risk, but theres risk in owning any piece of any company.

I don't think zeroing out home equity to buy bonds is a bad idea.

After all, you either have real estate exposure or some other one, bond or equity exposure. While I haven't done the analysis, I would venture to guess that investment grade bonds at the very least have lower volatility than real estate.

Do you think the investment grade bonds are going to yield better than the interest rate on a home mortgage ?!?

Yeah I doubt a bond would pay that well.. but he does have a point about risk exposure. Your mortgage could be thought of as an investment in the local real estate market.. diversifying that risk by buying shares in a REIT could be a good strategy... especially if you're in a low-growth area (ie outside of the big cities, midwest, etc).

Hey, here's a shockingly simple idea: don't buy a home if you don't want equity, rent instead.

There are systematic advantages to having a mortgage vs renting.

Maybe not, but you can easily move into lower grade and higher yield debt depending on the interest rate of your mortgage.

Step 1 - get as many loans, credit card debt, financing etc.

Step 2 - spend all the cash to buy bitcoin

Step 3 - bankruptcy

What happens if they aren't able to sell off the assets at a high enough price to pay the inheritance tax? Does the amount owed scale with how much the assets are actually able to fetch in a mass sell-off like this?

There is absolutely no problem with liquidating a $7B slice of equity in a matter of weeks (probably even days). People don't appreciate just how enormous the capital markets are.

If it is a single stock it may still affect the price. That’s why big sell-offs are usually done over a long period of time, like weeks.

People also don’t appreciate just how small the capital markets are and how much they rely on market makers.

Weeks because you may need an actual human broker to find you counterparties.

50% Inheritance tax would do wonders in the US. Honestly if you want the best people at the top then no one should start with a billion dollar advantage.

Or you could have the unintended consequence of zombie executives wandering the earth until it's in their family's economic interest to declare them dead and bury them in the ground.

My understanding is that this only happened in this case because Samsung is "too big to fail" for the Korean economy. Kia, LG, and Samsung combined make up 2/3rds of the economy.

Worth watching: https://www.youtube.com/watch?v=jRzysFhyZ8Y (@11:45 they talk about TBTF)

They are too big to fail and that’s why the government wants a single family to control it?

It has been working well so far. There's the old saying "don't fix it if it ain't broken." I think there's plenty of arguments to make that it is broken, but there are plenty to say it isn't. There are different views on this held by different people and different countries. Some would say break it up so it isn't too big to fail. Others say it is the size that allows it to do so well. Unfortunately the nature of the conversation is extremely complex and often these discussions turn reductionist.

TBTF is the public justification they give, but the actual reason is probably that the chaebol and government have always been very intertwined, and not always in the direction of the government exerting influence on the chaebol.

I don't know why you're being downvoted, it's a fair question.

I assume that the government doesn't necessarily care to have a single family control it. But they'd perhaps rather not push a legal campaign against that controlling family, and risk causing harm to (or retribution from) Samsung in the process.

> 50% Inheritance tax would do wonders in the US.

The US is already at 40%. The Feds want 40% of anything over $11.58 million when you die.

Going to 50% isn't going to do wonders.

If you wanted to severely adjust the wealth inequality caused by the extreme wealth of the top 0.01%, you'd want a 80% or 90% rate.

Increasingly the US Senate is rich enough it'd never be allowed to become law.

Only 0.002% of estates pay the tax every year. Among the wealthy that are close to retirement or death, the smart ones transfer their wealth to insurance or separate entities like a foundation, limited liability company, family limited partnership, or charitable trust.

That is wrong by a factor of ~100. 0.2% of estates in 2017 paid an estate tax. [0]

[0] - https://www.cbpp.org/research/federal-tax/ten-facts-you-shou...

I believe in the US it's around 40 percent for billionaires.

The federal tax kicks in at $11.5 million (although that is scheduled to sunset in a few years). If you happen to die in the wrong state the rate can be as high as 60%

On the other hand the government should not just steal half a family's wealth just because a guy died.

It's to any source corroborating that whistleblowers were disappearing and ending up dead?

As a Samsung employee, I'm a bit worried if there could be a governance dispute. Due to the Samsung Group not having a holding company, and the high amount of the inheritance tax in South Korea, the current major stockholder Lee Jaeyong, who is the son of Lee Kunhee, may have some difficulties maintaining the current governance. I hope this does not lead the company to a crisis.

Is there a possibility of SK govt becoming a significant shareholder in Samsung,and thereby getting seats in the board?

What a brutal way to go. It has been widely speculated that he has been in a vegetative state since 2014, kept on life support to give the company time to restructure its assets and consolidate power under Lee Kun-Hee's son, Lee Jae-yong, so that their family's power persists even in the wake of paying South Korea's enormous wealth taxes.

Samsung undoubtedly played a key role in South Korea's economic ascendance, but Lee Kun-Hee will leave behind a complicated legacy of industrialization mixed with corruption and hyper-crony capitalism.

One could only hope to be so useful even when nearly dead.

That might be a type of usefulness that some of us could do without.

> In 1995, as part of the emphasis on quality, he visited a Samsung plant in the town of Gumi after a batch of cellphones was found to be defective. > [...] > Together they watched as $50 million worth of phones, fax machines and other inventory was smashed to bits and set ablaze. The employees wept.

Interesting, in a documentary (puff piece) by Singapore-based news organisation CNA, I heard a near identical story about faulty fridges made by the China-based manufacturer Haier [1] being smashed by their workers in a similar way in 1984 after an order by CEO Zhang Ruimin: https://youtu.be/WK7mxBy1fNw?t=594

Sounds like it's a a common strategy for low-quality manufacturers trying to improve themselves (other than Kaizen / The Toyota Way)

Ngl, heard a similar story about Konosuke Matsushita at Panasonic. I think it's a cultural thing, but why would Haier do it in the 1980s, I don't know. Chinese products were known as being shit well into the 00s.

Not working for me, but this one is: https://beta.trimread.com/articles/45951

Much more detailed article. Thanks!

Given the speculation, someone should mention Douglas Adams' concept of "spending a year dead for tax reasons" in Hitchhiker's Guide to the Galaxy.

Man's got an army of skeletons inside his closet, but Lee Kun-hee is undoubtedly a legend.

Does anyone have any more info? The article only says that he died, and then nothing else. It’s two sentences long.

Whoever he was, he at least deserves a summary of his achievements.

"Lee passed away on Sunday with his family by his side, the company said in a statement, without mentioning the cause of death. He had surgery in 2014 after a heart attack and was treated for lung cancer in the late 1990s."

Bloomberg - https://www.bloomberg.com/news/articles/2020-10-25/samsung-e...

"Lee, who told employees to “change everything except your wife and children” during his drive to foster innovation and challenge rivals such as Sony Corp., was South Korea’s richest person. He had an estimated net worth of $20.7 billion, according to the Bloomberg Billionaires Index. Samsung, the biggest of South Korea’s family-run industrial groups, known as chaebol, has been led by his only son since the heart attack.

“Chairman Lee was a true visionary who transformed Samsung into the world-leading innovator and industrial powerhouse from a local business,” the company said. “His legacy will be everlasting.”

Named one of the world’s 100 most influential people by Time magazine in 2005, Lee began overhauling Samsung Electronics after he saw the company’s products gathering dust in a Los Angeles electronics store, according to “The Lee Kun Hee Story,” a 2010 biography by Lee Kyung-sik. The Suwon, South Korea-based company had become known for cheap, low-quality electronics gear and was in the “second phase of cancer,” sending out 6,000 people to fix products made by 30,000 employees, Lee said in 1993, according to the biography."

As per elsewhere in thread: https://www.nytimes.com/2020/10/24/obituaries/lee-kun-hee-di...

It’s likely because he’s been assumed dead for years and most major publications have covered his story expecting him to die any day now (if he wasn’t already) over the last couple years.

Okay. Whattabout that inheritance tax situation?