Samsung chief steps down after tax indictment

South Korea's most powerful businessman said yesterday that he would step down after 20 years at the head of the giant Samsung Group, following his indictment last week for tax evasion and breach of trust.

The televised announcement by Lee Kun-hee, who has achieved almost heroic status in South Korea for his role in the fortunes of Samsung, came as a shock even in a society long used to its top businessmen being hauled into court.

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But analysts pointed out Lee Kun-hee and his family still control the country's largest conglomerate, sometimes dubbed the "Republic of Samsung", whose dozens of affiliates account for around a fifth of South Korea's exports. The group's products range from computer chips and mobile phones to supertankers.

Lee said in a statement: "I will step down from the Samsung chairman position today. I am saddened as there is still much to do and a way to go."

The group will dismantle its powerful strategic planning office, which critics say is an opaque organisation able to wield influence across some 60 affiliates, including flagship company Samsung Electronics, a world leader in computer memory chips and flat display screens.

Oh Suk-tae, an economist at Citibank, said: "I don't see anything more than a change of people in charge. There's no change at all in the fact that [the Lee family] will remain the owner."

Lee's son, Lee Jae-yong, seen as being groomed to take over, will step down from his executive post and work abroad for the group in an unspecified role.

Four other top executives also stepped down, including the head of the group's strategic division and the chief executives of Samsung Fire and Marine Insurance and Samsung Securities.

Shares in affiliates such as Samsung Securities and Samsung Construction & Trading fell by between four and eight per cent on the news.

Samsung Group has more than 250,000 employees and an annual revenue of $160bn.

There has been widespread speculation that once the government eases restrictions, South Korea's major family run conglomerates would snap up local banks.

Samsung has said it will not move into the banking sector, nor set up a holding company.