The family of late Samsung Electronics chairman Lee Kun-hee said on Wednesday they will pay more than $10.8 billion in inheritance taxes for his estate and donate his vast private art collection to state curators.
Lee, who is credited with transforming Samsung into the world's largest smartphone and memory chip maker, died on October 25 with an estate valued at around 26 trillion won.
The Lee family's handling of the hefty inheritance tax bill - one of the largest-ever in Korea and globally - has been closely watched as it could have resulted in the dilution of the family's controlling stake in Samsung.
There was also significant public interest amid calls for Lee's $1.76 billion art collection to stay in South Korea and reports the family planned to make a large donation to make reparations for Lee's conviction on tax evasion and embezzlement charges over a decade ago.
The family said they planned to pay the tax bill over a period of five years in six installments, starting this month.
"It is our civic duty and responsibility to pay all taxes," it said in a statement released by Samsung.
Shares in Samsung C&T shares dropped as much as 5.5%, however, as the statement provided no detail on how Lee's shares would be distributed if any shares would be sold, nor specifics on how the family planned to fund the payments.
"There was general investor disappointment as no details about how the stakes will be divided were revealed," said Lee Sang-hun, an analyst at HI Investment & Securities.
Investors will instead need to wait for regulatory filings to discover changes in shareholdings by Lee's son and Samsung Electronics vice chairman Jay Y. Lee or other family members.
The family had been discussing using shares in affiliated companies as collateral for personal loans to pay part of the tax bill to avoid the sale of their Samsung holdings, Reuters reported last week, citing sources.
Analysts have said the family is likely to use loans and dividends from both their own and Lee's shares to pay the tax.
Lee's shareholdings included a 4.18% stake in Samsung Electronics, 0.08% of Samsung Electronics preferred shares, 20.76% of Samsung Life Insurance, 2.88% of Samsung C&T, and a 0.01% stake in Samsung SDS.
Samsung C&T is the de facto holding company of Samsung conglomerate, of which Jay Y. Lee is the largest shareholder with 17.33% stake.
The heir is currently halfway through a 30-month jail sentence for bribery and other offenses. The presidential Blue House on Tuesday dismissed calls from some business lobby groups to grant him a pardon.
HEALTHCARE AND ART
As anticipated, the family announced it will donate 1 trillion won to improve public healthcare, including 500 billion won to build South Korea's first specialist hospital for infectious diseases.
Much of Lee's extensive personal art collection, including masterpieces by Picasso, Monet, and Chagall, will be donated to organizations including the National Museum of Korea and the National Museum of Modern and Contemporary Art, the family said in its statement.
The remaining works by Giacometti, Rothko, and others will be managed by the family and Leeum Samsung Museum of Art, Yonhap news agency reported.
Former culture ministers and art groups had earlier called for a new law to allow the family to donate the art in lieu of some of the tax bill.
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ