March 19, 2021 13:40
Samsung chief Lee Jae-yong, and his two sisters took out hundreds of billions of won in bank loans to pay the inheritance tax on their vast fortune after their patriarch Lee Kun-hee died last year.
Bank loans were the only alternative to selling some of their stocks and losing control of the vast publicly traded conglomerate, which hangs by a thin thread through a Byzantine holdings structure.
They initially tried to put up their stocks as collateral for the loans, but no brokerages in Korea had that much money because they have almost maxed out their credit lines after retail investors took out a record amount of loans in a stock-investment frenzy.
One industry insider said Lee's sisters and mother Hong Ra-hee "tried to obtain loans from brokerages using their stocks as collateral but were told they couldn't borrow as much as they wanted, so they went to the bank instead."
Lee Jae-yong's stock dividends alone totaled around W210 billion last year, so he is good for almost any amount of credit (US$1=W1,125).
The Samsung heirs could also sell some of their art collection, which includes one of Monet's water lily paintings and is thought to be worth W2-3 trillion. The Monet would fetch more than W100 billion at auction.
Samsung has asked the Galleries Association of Korea and two other organizations to appraise around 12,000 artworks in the collection and the process is almost done. But there have been increasing calls for Samsung to donate the art to museums and prevent them from disappearing into billionaires' vaults around the world.
Lee senior's estate was valued at around W22 trillion, which entails an inheritance tax of close to W13 trillion. Even if paid in installments, that would be more than W2 trillion in inheritance taxes this year alone. They have until April 30 to pay up.
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