52. The Republic of Samsung

Samsung's founder, his son, and his grandson turned a vegetable and dried fish shop into a global superpower and a symbol of South Korean success. But their fight to keep the company in the family has also landed it at the center of some of South Korea's biggest corruption investigations. Now, Samsung and South Korea have to figure out what comes next: Can the company continue without its founding family at the helm? And what would that mean for the country Samsung helped build?

Produced by Sarah Wyman, with Charlie Herman and Julia Press.

Geoffrey Cain is the author of Samsung Rising: The Inside Story of the South Korean Giant That Set Out to Beat Apple and Conquer Tech.

Transcript

NOTE: This transcript may contain errors.

CHARLIE HERMAN: Our story begins with a horse. Well, actually, three horses. Their names were Rausing, Salcido, and Vitana, and they lived at an equestrian center in a small town in Germany. These were special horses, the kind used to train for elite, dressage competitions. And the woman who rode them was a young South Korean who had hopes of competing in the 2020 Olympics. That is she did, until 2016.

CNN: Park Geun-Hye's approval rating has plummeted to an all-time low. The South Korean President embroiled in a scandal that has thousands of protesters calling for her resignation.

CH: It turned out those horses were part of an extensive bribery and corruption scandal that eventually led to the impeachment and conviction of South Korea's president.

So, who ponied up for Rausing, Salcido and Vitana?

EURONEWS: The heir apparent of tech giant Samsung has become a criminal suspect in a widening corruption probe engulfing South Korean president Park Geun-hye.

CH: Why would the heir apparent of Samsung spend millions of dollars on some horses? Well, it's only the latest twist to a story about one family that's tried for decades to hold on to the reins … of one of the world's largest. companies.

From Business Insider, this is Brought to you by... Brands you know, stories you don't. I'm Charlie Herman.

Samsung doesn't just make flatscreens and smartphones, it's a company that has defined South Korea for decades.

Behind the brand are three generations of men — a grandfather, father, and son — who turned a vegetable and dried fish shop into a global empire.

But what happens when the family business becomes too big? And what does it mean for South Koreans when the leaders of that company keep ending up in court, charged with corruption?

Stay with us.

ACT I

CH: Geoffrey Cain is a foreign correspondent, and the author of a new book, Samsung Rising. When he moved to South Korea in 2009, he quickly realized that Samsung was a big deal.

GEOFFREY CAIN: It makes everything. You know, if you were to stand on a street corner and look around, pretty much everybody would have either a Samsung component in their pocket or at their home or in their car.

CH: And not just in South Korea. The company makes up 20% of that country's exports. It is in the top 20 list of the biggest public companies in the world. It has a bigger chunk of the global smartphone market than Apple.

GC: And this is why Koreans call their country the Republic of Samsung. Like, they simply cannot be removed from the success of South Korea.

CH: For the past 82 years, one family has overseen all of that success.

GC: The Lee family, they are treated like gods at Samsung.

And in South Korea, they're a bit like that family in HBO's "Succession," where the kids are trying to hold on to the family business. They're incredibly wealthy, powerful and shrouded in mystique, like a South Korean version of the British Royal Family. Some of them live about an hour south of the capital Seoul, at a palatial estate where peacocks roam the grounds. When the chairman shows up at Samsung offices, his representatives have been known to instruct employees on how to behave.

GC: You should not open your windows and look down at the chairman. Nobody looks down. You're supposed to look to him or look up at him.

CH: The highest-ranking members of the family are rarely seen in public. And tabloid reporters hunger for news about the Lees.

GI-WOOK SHIN: When I think of like a Samsung family, it's a little similar to North Korean Kim family or even royal family.

Gi-Wook Shin is a professor of sociology and the director of the Korean Studies program at Stanford University. He grew up in South Korea, and he says Samsung's role there is different from the relationship most Americans have to, say, Apple or Google.

GWS: I think you could argue that Samsung has become more than just a business or company in Korea. Samsung may symbolize, you know, power. And people are joking that a president can last only for five years, but Samsung can last for... forever, right? (laughs)

CH: The Lee family has passed control of the company from one generation to the next ... father to son for the past 80 years. And the one who set it all in motion was Lee Byung-Chul. Also known as B.C. Lee

BC Lee was born in 1910, the same year Japan invaded Korea and turned it into a Japanese colony. Koreans were humiliated and furious, and Japan's policies made things worse.

GWS: They were forcing Koreans to speak only Japanese in schools. They were encouraging or even pushing Koreans to adopt Japanese names. And towards the end of colonial rule, Koreans had to worship Japanese emperor.

CH: While the Japanese chipped away at Korea's culture, Koreans started promoting what Professor Shin calls "ethnic nationalism"— a kind of nationalism rooted in racial purity, family heritage and biological DNA. Koreans felt they were different from the Japanese—and superior—because of their heritage. B.C. Lee would have grown up in this environment, and that way of thinking is reflected in the company he founded.

GWS: Korea was shaped by this strong sense of patriarchy. And sense of family, actually. And you can't really think about Samsung without thinking about Lee family, right?

CH: Samsung got its start in 1938, when B.C. Lee opened a vegetable and dried fish shop during the run-up to World War II. He saw it as a chance to make some money … but also a way to earn Korea some credibility. He called his new shop...Samsung Sanghoe.

GC: It means three stars. Strong, big, eternal. That's the symbol of that name, three stars.

CH: Over the course of the war, B.C. Lee amassed a small fortune. With that money, he went on to start other businesses.

GC: He's expanding and expanding and expanding. And then finally the war ends because of the atomic bombs on Hiroshima and Nagasaki, which leads the US to come in and to set up a military government in Korea to enforce the surrender of the Japanese emperor.

CH: For the first time in B.C. Lee's life, Korea was no longer under Japanese rule. With his network of businesses, and contacts with the U.S. military and new Korean politicians, B.C. Lee was well-positioned to grow his company. He bought a local university and a newspaper. He relocated to Seoul, the Korean capital. And along the way, he started to think seriously about what the future of Korea would look like.

GC: The leaders of Samsung, they didn't set out to make a profit. They weren't setting out to make money. They were setting out to build a nation from nothing.

CH: To do this, B.C. Lee made what you might consider an ironic decision: he borrowed the business model for Samsung from the Japanese. Before the war, B.C. Lee had briefly studied business in Japan. And when he was there, he saw how an extremely powerful group of companies, known as the zaibatsu, had kickstarted industrialization and pushed Japan onto the world stage.

GC: Mitsubishi is a zaibatsu. Mitsui, another major Japanese company. So these were companies that just had such a hand in building the Japanese nation into something that was powerful and feared and a nation that could expand and that could even take on America, bombing Pearl Harbor. A nation that could really be a force in the world.

CH: The zaibatsu were owned and operated by a circle of elite Japanese families who passed the companies down generation to generation like a sort of family inheritance.

GC: B.C. Lee respected them. He respected their longevity, their size. He thought that that was what a successful business should look like. And he even said to his employees one time that he wanted Samsung to last 300 years, which is also what the Japanese zaibatsu leaders would say to their employees. 'We want Mitsubishi to be a 300 year enterprise. We need a 300 year plan. 'And that just gives you a sense of the scale and the timeline that these business leaders are looking at.

CH: So he's thinking very longterm.

GC: Yeah, very, very longterm.

CH: So as B.C. Lee invested in the future of Samsung, he followed the zaibatsu model ... especially its emphasis on "family." That included plans to hand the company over to one of his sons, as well as how he went about creating the culture at Samsung. For example, he was famous for taking the hiring process incredibly seriously.

GC: In his tenure, he sat in on 100,000 interviews.

CH: Oh, my God. How is that possible?

GC: He would run around to different interviews and he would go sit in for a few minutes, look at the person inquisitively as if he's reading you. He was trying to figure out if this person was telling the truth. If this recruit could be trusted and I could entrust them with major tasks in the future. In, 20 years down the road, will they be a leader of my company?

CH: B.C. Lee was looking for the attributes of the kind of person who later became known as the Samsung Man. He was the gold standard for Korean manhood: well-spoken, handsome, accomplished, refined. The embodiment of everything Korea had to offer.

But then, in 1950, the North Korean army marched into Seoul...

NEWS: Will there be peace? Or war?

CH: ...and everything changed — not only for Korea as a nation, but for what Samsung would become.

NEWS: In the absence of Soviet obstruction, the security council voted overwhelmingly in favor of armed intervention to protect the Korean republic.

CH: B.C. Lee knew he was in trouble. He had worked with the Americans and had embraced Japanese business ideals. When the North Koreans arrived, they began executing capitalists like him. So when they showed up on his doorstep demanding to inspect his documents and then raiding Samsung's warehouses, B.C. Lee knew it was time to get out of there.

GC: He used whatever money remained and bought a truck and loaded up his executives and their families and whoever he could get on, and they drove south to Busan. If they had stayed in Seoul, they probably would have all died. I don't think that Samsung would have existed today.

NEWS: At long last, the misery and the bloodshed of the war in Korea has been halted. Let us hope indeed that it has ended.

CH: When the war was over, they climbed back into their trucks and returned to Seoul … and for the second time...

GC: They set out on a mission to rebuild this barren nation that had been destroyed.

GWS: Korean war was very destructive.

CH: Again, Gi-Wook Shin, professor of Korean Studies at Stanford. He says the Korean War was especially devastating because more than half of the nearly five million casualties were civilians.

GWS: So that's about 10% of the Korean population at the time. And it destroyed a lot of facilities. Including in North Korea. So, you know, both Koreas really had to rebuild.

CH: After the war, South Korea had virtually no natural resources to form the basis of a new economy. Its business prospects were not looking good.

CH: When the war was over, what was Samsung?

GC: Samsung was a small-time trading company that had lost pretty much all of its inventory and really had no chance for survival. And B.C. Lee talks about this, that the only way to get out of this situation was for him to team up with the first president of Korea, who decided that Korea was, yes, very poor, had poor prospects, but thought that maybe there was a chance for rebuilding it.

CH: Samsung's early alliance with the government set the tone for a relationship that would last for years: What's good for Samsung is good for South Korea.

GC: And this was really the period when the company saw explosive growth. Samsung was turning into the symbol of the nation.

CH: The company became involved in almost every aspect of life in South Korea. The economy itself became increasingly centered around Samsung. And as the company's network of businesses grew, some have alleged that the Lee family made regular cash payments to politicians to minimize investigations.

But by the end of 1960, a military coup overthrew the South Korean government....

NEWS: Seoul, capital of Southern Korea. Riots on the scale of revolution...

CH: ...and there was a new president in charge.

GC: This is a leader who studied the Japanese model and studied how these zaibatsu groups had gotten so big and how they had both been very corrupt and they directed the nation and they put politicians in office. But also, they had done a lot to industrialize Japan and to turn it into the power it was. He wanted to do something similar with Korea. But he looked at people like B.C. Lee at Samsung and he saw a bunch of white-collar criminals.

CH: While the new President understood that Samsung, the company, was important to the success of South Korea, he also wanted to curb the influence of the Lee family. So in a move that would be repeated over and over by future government officials, he accused B.C. Lee and one of his sons of corruption, He didn't actually want to put B.C. Lee in jail — he wouldn't be of much use to him there — but he did want to show him who was boss. So, the courts hit Samsung with a fine of nearly 4 and a half million dollars, and B.C. Lee was forced to step down from running the company he created.

GC: It was a big national scandal at the time. But then after a while, as Samsung was slowly rehabilitated, B.C. Lee returned to his throne in 1968, about three years later, came back to Samsung, became the chairman of Samsung again.

CH: So, what were the lessons that B.C. Lee and Samsung took away from the 1960s with its brush with these investigations... What was the takeaway for them?

GC: The takeaway was we can engage in this behavior. We can cook up these schemes and try to see what we can get away with, but we have to not push too far.

CH: And yet at the same time, when they do run afoul of the rules that everyone else is supposed to follow, they're not necessarily held accountable, it appears.

GC: Yeah. Yeah. Because they're too big to fail. They're just too important.

CH: After the break, Samsung grows even bigger. And some South Koreans start to ask: is this company not only too big to fail, but too big for a single family?

ACT II

CH: We're back.

B.C. Lee and Samsung helped rebuild South Korea not once, but twice. But by the 1980s, the country was still trailing far behind its neighbor — and sometimes business rival Japan — Professor Gi-Wook Shin remembers what the company's reputation was like when he came to the United States in 1983.

GWS: At the time, Samsung was making very small black and white TV, and you can buy very cheap Samsung TV in Costco, for example. So at the time certainly, Samsung cannot match Sony in TV for example, but now Samsung is much better than Sony and Koreans are very proud of that, that now a Korean company is winning over a Japanese one.

CH: The reason Samsung now beats Japanese companies like Sony is thanks to its second leader, Lee Kun-hee, B.C. Lee's son. But before he took over the company, most Koreans — and even Samsung executives — they didn't see him as an especially promising leader. His dad was a national hero. Lee Kun-hee? He seemed kind of like a spoiled rich kid.

GC: Lee Kun-hee, he's seen as a playboy. He likes fast cars. He drives his Porsche. He has a private racetrack at Samsung, and he loves going at 200 miles per hour, just driving around. He was in many high-profile car crashes. He was rumored to have 95 children out of his marriage. He was rumored to have this lover in Los Angeles who was rumored to be some kind of celebrity.

CH: Just a lot of gossip about him.

GC: Yeah. This is all gossip, and these were all rumors that I think were never really proven.

CH: When his father died of lung cancer in 1987 and Lee Kun-Hee became Samsung's new chairman, the company's managers were...concerned.

GC: They thought that he would be... not such a great leader. So, even B.C. Lee, before he died, he actually predicted that Samsung would just collapse, it would fall apart.

CH: Not much faith in your kids. (laughs)

GC: No, no, no.

CH: To be fair to Lee Kun-Hee, Samsung was not in great shape when it fell into his hands. It had made great strides in the electronics business during the 1970s, but on a global scale, it still wasn't keeping up with its competitors. And when Lee Kun-Hee finally understood that Samsung was falling behind, he faced a bigger problem.

GC: His executives were not listening to him. They were blowing him off. They called him a lucky heir. They called him this rich kid who doesn't really know business. So, Lee Kun-Hee, the new chairman, he really wants to prove himself. He wants to show that he's got the stuff, he's got what it takes, and he wants to establish himself as a serious leader of this company.

CH: So, he ordered a series of secret video recordings to be made inside his own factories. And what he saw was terrible. For example, in one video, the lids of Samsung's washing machines were too big.

GC: So, instead of restructuring the factory process to make sure that they're better quality machines, the factory workers would spend all this time shaving off a little bit, just taking a little knife and just shaving part of it off, and then they'd go sell it, and then, of course, they got complaints about faulty products. Chairman Lee realized, and this is in his writings, that not only is this really bad for the company, but he calls it a cancer. He says that faulty products are a cancer, and it's a criminal act against the company to release a faulty product.

CH: Lee Kun-hee, who was in Germany studying efficient manufacturing at the time, called up a group of Samsung executives. He insisted they record the call, and then proceeded to scream into the phone for an hour. Cain says Samsung played this tirade over the speakers in its buildings for years, like a very aggressive pep talk for employees.

Then, Lee Kun-hee told his executives to get on a plane. They had 24 hours to get to Frankfurt.

GC: So, they all show up. And then nobody knows what exactly is going to happen, but they all walk in, and they sit down in this conference room, and he walks in, and there's this heavy air in the room. Everybody knows that something is wrong. Then he sits down at the podium, and then suddenly he just yells at them. He releases this anger.

CH: For eight hours, without a break, Lee Kun-Hee dressed down Samsung's top leadership in a spitting fury.

GC: Telling them what a terrible job they've been doing and how they need to change everything. They need to rethink this company, rethink who they are, rethink what it means to be a Samsung Man, and then he leaves them with this word of advice, that you need to change everything except your wife and children. He says that if you produce a faulty product three times, you will resign. So, everybody is freaked out, and they realize they can't stop ignoring him, and actually, they do have to get moving.

CH: Lee Kun-Hee would spend the next three months on a lecture circuit of sorts. He visited Samsung campuses and unleashed his frustration on auditoriums full of employees. Over time, his speeches were transcribed and turned into an 8,500 page manual.

GC: That was the turning point. They realized, the alarm bell was ringing, and this was when it was really time to change things.

CH: It worked. Over the course of the following decades, Samsung had phenomenal success. It established itself as a real contender in the U.S. market. By 2012, the Galaxy S made Samsung the market leader in smartphones. In 2014, Samsung basically broke Twitter. It planted a Galaxy smartphone in Ellen DeGeneres' pocket when she hosted the Oscars. She used it to take a star-studded selfie...

ELLEN DEGENERES: Lean in, Channing, if you can get in also...

CH: ...with Meryl Streep, Jennifer Lawrence, and a whole … galaxy of celebrities…

ED: Brad, get in here! No, I'm taking it. Brad, Lupita!

CH: In South Korea, Samsung became even more powerful. Today, it makes up 15% of the country's GDP. Parents dream of sending their kids to work there. There's even something called the SAT — the Samsung Aptitude Test.

GC: The Samsung SAT is a nationwide entrance exam that, for most of Samsung's history, decided who would enter.

CH: Only about five percent of the nearly 100,000 annual SAT-takers move on to the next stage of Samsung's hiring. Again, Professor Shin:

GWK: You know, people say there's this Samsung List, like those people that Samsung I guess care or pay attention to, and if you don't belong to that list, then you're not really power elite in Korea (laughs). So... I mean, you can talk, but it means that Samsung has really become a powerful group in Korea. It's beyond... because their influence is everywhere. Not only in business, but in politics, in maybe education, in culture, in everywhere.

CH: But even as Lee Kun-Hee transformed Samsung into a household name around the world, he had another problem. Like his father had done for him, Lee Kun-Hee was determined to pass the business on to his son, Jay Lee. The thing is, Samsung had become so big, handing over control was a lot more complicated: Jay Lee needed to own a controlling stake in Samsung's companies if he wanted to be in charge. And that wasn't going to be easy.

GC: So, Samsung has a system of cross-shareholdings, and this is what allows Samsung to keep its family in power. So, the Samsung Lee family actually does not own Samsung.

CH: You have to remember that "Samsung" is actually a lot of different companies. There's the electronics company that you probably associate with the name, but there's also "Everland" — which owns the Samsung theme park, and there's Cheil Industries, which makes textiles. There's also Samsung Life Insurance. Samsung Air....

GC: It's just such a bewildering complicated structure of more than 50 affiliates that all seem to own a piece of each other. And it all reports back through these convoluted zigzag lines, going all the way up to the Lee family and Chairman Lee Kun-hee.

CH: So, Lee Kun-Hee had to figure out how to get all these moving parts to sync up just right so that when the needle skidded to a stop on this game of "musical shares," Jay Lee would end up in the right chair.

GC: So, there was a shady sale of shares. That's quite a tongue-twister.

CH: That first shady sale of shares — whew! that is tough — landed a couple of Samsung executives in court in the mid-90s. Then, A few years later, Lee Kun-Hee was found guilty of bribery...

GC: but then he was never actually sentenced to a real prison time. He had his sentence commuted, and then the president pardoned him and said, 'You're no longer a convicted criminal who bribed a past president, so don't worry.' This is that old pattern. 'Time to go back to Samsung and build our nation.'

CH: Then, just over ten years later, in 2008, Samsung and South Korea's government were back in court, again over issues connected to ensuring Jay Lee's ascension to the Samsung throne. Prosecutors brought Chairman Lee Kun-Hee back to court, this time on allegations of tax evasion and breach of trust.

GC: So, in the end, he was sentenced to prison. The judge commuted it again, and then the president of Korea gave him another pardon and said, 'Alright. Now it's time to go back,' because the Samsung chairman was on the Olympics committee, so they wanted to use him to try to lobby to get that Winter Olympics in Korea.

CH: As of today, Jay Lee is still not the chairman of Samsung. And that's partly because, despite all the lengths he went to, his father, Lee Kun-Hee, did not finish putting all the pieces in place before having a heart attack in May of 2014. Lee Kun-Hee was hospitalized, and shortly afterwards, suffered a serious stroke.

GC: He's been confined to a hospital suite at the Samsung Medical Center, and he's, nobody's heard from him or seen him in public since 2014.

CH: Six years?

GC: Six years.

CH: So, theoretically, he's running the company but has been absent?

GC: He's the chairman of Samsung, and he's voted in shareholder meetings, but he's absent, and nobody's heard from him. He's unable to speak. I've heard that he can, and it's been reported that he can move his eyes, I mean, Samsung is very tight-lipped about it, even internally. I've heard from executives that they don't talk about it, and they're told not to talk about it. The chairman's health is one of the most sensitive topics at Samsung.

CH: Then who's running the company?

CH: The answer to that question, and the return of South Korea's most controversial horses... after the break.

ACT III

CH: We're back.

Samsung has survived for 82 years through two major international wars, and massive technological and economic changes, all under the leadership of the Lee family. But the last decade has been a rough one. First, the company got into a high-profile, seven-year legal battle with Apple.

PBS: Apple claims Samsung has illegally copied an operating system it says it pioneered in iPhones and iPads. It's seeking $2.5 billion in damages.

CH: Before settling out of court, Apple and Samsung's fight snowballed into one of the biggest patent suits on record. Then, of course, you'll remember the Galaxy Note 7, that's the one that exploded..

CNN: The Galaxy Note 7 is dead, and Samsung is in a disastrous situation.

ABC: Oh my god, [unintelligible] car…
The Note 7s, burning and exploding in cars, homes, and at work.
It sounded like it bursted, and then there was smoke everywhere.

CH: Samsung was forced to do two recalls after devices around the world started spontaneously combusting. They were eventually banned by U.S. airlines and the company was reduced to a punchline in the 2016 news cycle.

COLBERT: I have a special message for anyone watching tonight's show on their Samsung Galaxy Note 7: run for your lives! [laughter]

GC: There were some pranksters who released the Grand Theft Auto mod. And this was a famous mod at the time, but you could actually go into a shop in this video game and buy these explosive Galaxy Note 7s and then hurl them at cars and stuff and blow police up and do all this. Yeah, they were like grenades.

CH: But neither of these public relations ordeals hold a candle to what happened next. Because now, Samsung's leadership and the future of the Lee dynasty — it was all riding… on a few horses.

ARIRANG: A number of the witnesses that are set to testify today come from the horseback riding community...

CH: That's right. In February 2017, Jay Lee, the chosen one, was arrested and put on trial for bribing a close friend of South Korea's president… with that trio of horses - Rausing, Salcido, and Vitana. Remember them?

ARIRANG: Samsung provided nearly 7 million US dollars to Jung's riding training and was allegedly planning to give an additional 19 million dollars.

CH: So let me go back a couple of years to try and explain what happened. In 2014, after his father Lee Kun-Hee was hospitalized, Jay Lee did not win control of Samsung. To try and fix this, Jay Lee, along with other company executives, took a series of steps that... raised some eyebrows.

ARIRANG: And in latest industry news, two major units in Korea's biggest conglomerate, Samsung Group, have announced a merger.

GC: Samsung would say that these mergers and share sales are actually to consolidate business units, but if you look at what's being consolidated, it'll be like the theme park company is being consolidated with the construction company and the fashion company, and it's like, why do you need a company that does those three things? It's to put Jay Lee in power.

CH: The merger drew the attention of Samsung's shareholders, who had to vote on whether or not to approve it. A US-based hedge fund, known for its aggressiveness, got involved, and soon, the whole thing devolved into an all-out war for votes between those shareholders who opposed the merger and Samsung. And Samsung did not want to lose.

GC: They went to all kinds of small time shareholders and give them cakes and watermelons and fruits and tell them that Samsung is the nation, and 'we should support Samsung because it's important for the future of Korea.' One day, they put on just dozens of commercials and newspaper ads. They took out all kinds of magazine ads and web ads. I remember I would turn on my TV, and I saw the commercial, and it would show all these Samsung employees. It would show a factory worker and then a construction worker and a shipyard worker, and they're explaining to you why Samsung is so important, and this merger must go through, so we implore the Korean people to please support us.

CH: Samsung took other steps that gave its allies even more voting power. At one point, Cain says South Korea's equivalent of the CIA even got involved, spying on the opposition on the company's behalf. Samsung really wanted this merger to go through. And finally, it did.

NEWS: Samsung Group's founding family victorious over US hedge fund Elliott Associates as shareholders vote in favor for the merger of two Samsung affiliates.

CH: Even after all of that, though, Jay Lee still did not have enough shares to take over the family business. And before he had a chance to make another move, a huge scandal erupted that gripped all of South Korea. It connected this merger with the impeachment of the country's president, Park Geun-Hye.

BBC: The moment a president was ousted. The head of South Korea's highest court says President Park committed a grave breach of the law.

CH: A major Korean broadcaster discovered President Park wasn't really running her government. Instead, it was being controlled by a close advisor and confidant who not only did not have an official role, she was also the daughter of a Korean cult leader.

This revelation sparked the largest protests in South Korea's democratic history — hundreds of thousands of people took to the streets. President Park's approval ratings fell to 4 percent.

And in the midst of this political crisis, prosecutors revealed that Samsung had provided the money to buy horses for the President's confidante. The horses were for her daughter. In return, the advisor along with the President, would direct the country's pension fund to support Samsung in the merger that helped Jay Lee consolidate power. We reached out to Samsung for a comment on these allegations. It did not respond.

GC: It's a rabbit hole. It's a bizarre story. It's one of the weirdest stories I've ever covered as a journalist.

CH: All of it — the horses, the watermelons, the spies — it all was done to pave the way in the very complicated transition of Samsung from father to son. Unfortunately, for Jay Lee, he was found guilty of bribery and embezzlement and sentenced to five years in prison. But then, a familiar refrain:

GC: He served one year in prison and then he went to his appeal trial and actually the judge let him out. So, they upheld part of his bribery charge, but then it was the same thing again. This is when that pattern kicks back in and they said, 'Alright, you're still guilty, but you're free to go because we're going to lessen your charge.'

CH: The prosecution appealed and South Korea's supreme court ordered a retrial that could result in more jail time for Jay Lee.

In the middle of all this, there is one gigantic unanswered question: Who is going to run Samsung?

Now, Remember, Jay Lee's father — who is still chairman — hasn't been seen in years. Conspiracy theorists believe he's already died. And as for Jay Lee? The widely held assumption is he'll still take over Samsung some day, after all this blows over. But what happens after that is unclear.

CH: What is Samsung if the Lee family is not as actively running it?

GC: Without the Lee family, it's like removing the core. It's like removing one of the purposes of their existence. I think that a lot of Samsung executives can't imagine a Samsung without a family member at the helm.

CH: In the confusion of the past couple of years, how is the company doing?

GC: It's actually, it's been doing quite well. So in 2017, Samsung overtook Apple as the most profitable tech company in the world. And this was as the heir Jae Lee was sitting in jail. So everybody's sitting there wondering, 'Okay. Well, if you're doing this well and you're pushing the South Korean stock market to record highs, why do you need this heir who is sitting in jail right now? What purpose does he serve?'

CH: As the future of the Lee family's control of Samsung is unclear, many South Koreans are evaluating how they feel about the company.

GWK: Just like in any other event, any other people or organization, there's a good and bad, right?

CH: Again, professor Gi-Wook Shin.

GWK: And, you know, you understand why Samsung is getting criticism, especially from Korean people, I mean there's some good reason to do that. But at the same time, my overall view is that Samsung deserves more credit and respect.

CH: A couple of years ago, Shin actually met Jay Lee. One of the centers Shin leads trains a couple of Samsung executives every year. And Shin says, having met the once and future chairman, and being impressed with him, all of it makes watching what's happening now hard.

GWK: You, know seeing him go through this all troubles, I feel so sorry, personally. But at the same time, I understand why the Korean public is so critical of what they've done.

CH: Professor Shin says there seems to be a generational divide in how South Koreans feel about Samsung. The older generation, Koreans who lived through the war and watched their country struggle to rebuild, they appreciate what the Lee family achieved and what it's done for their country.

The younger generation, however, grew up with Samsung semiconductors embedded in all their electronic devices. Samsung is a giant, global company. They might be proud of this, but this generation didn't experience where South Korea started, and don't have the kind of connection to the company their parents and grandparents do.

And that could mean a different kind of future for Samsung and the Lee family.

GWK: It just can't continue in the way that they have in the past. It's a different era. Now people demand more transparency, more fairness, more justice. So unless and until they figure out this succession problem, they'll continue to get criticism from Korean society and Korean people. And I think that's where we are right now.

CH: A couple of weeks after we spoke to Professor Shin, Jay Lee, who is still the de-facto chairman of Samsung, made an extraordinary announcement: He no longer plans to pass on the leadership of Samsung to his children. In a rare press conference, he acknowledged that all the problems at the company — the scandals, the corruption charges — started because of the succession issue. And then, he apologized.

If he follows through on that promise, Jay will be the last Lee to run Samsung, and the family's control of their business empire will come to an end after three generations.

CREDITS

Geoffrey Cain's new book is called Samsung Rising: The Inside Story of the South Korean Giant That Set Out to Beat Apple and Conquer Tech.

This episode was produced by Sarah Wyman, with Julia Press and me, Charlie Herman.

You can keep up with the team in our Facebook group or on Twitter, we're @BTYBpod. And of course, our inbox is always open: btyb@insider.com. If you're enjoying the season so far, do us a favor and leave a review on Apple Podcasts, Stitcher, Spotify, or wherever you listen—it really does get the word out.

Special thanks this week to Gotham Podcast Studio and Claire Banderas.

Our editor is Micaela Blei, Our sound engineer is Bill Moss. Music is from Audio Network. John DeLore and Casey Holford composed our theme. Dan Bobkoff is the podfather. Sarah Wyman is our showrunner.

Brought to you by... is a production of Insider Audio.