South Korea’s largest conglomerate Samsung Group battling with unfavorable trade conditions and technology challenge after its hardware flop with Note7 recall faces unprecedented leadership vacuum after a court warrant on pretrial detention was filed against Jay Y. Lee, vice chairman of Samsung Electronics.

Lee ascended as the legitimate leader of Samsung Group by becoming the largest single shareholder in Samsung C&T that after merger with Cheil Industries acts as the holding company of the conglomerate and registered managing director of Samsung Electronics board after running the group on behalf of his father Lee Kun-hee who has been bedridden since 2014.

Although the expansive network of Samsung is under the responsibility of individual chief executives, group-wide management directions and investments all go through Lee. His two stewards - Choi Gee-sung, head of Samsung’s control tower Future Strategy Office, coordinates group-wide affairs and his deputy Chang Choong-ki handles external affairs -, but Lee ultimately has the last say.

Lee has represented the group in business events and spearheaded major management moves like the sell-off of its chemical business units and acquisition of the U.S. automotive electronics company Harman International Industries Inc. In case Lee goes under pre-trial custody, Samsung Group for the first time ever would be without a captain from the Lee family running the ship.

Lee’s grandfather and group founder Lee Byung-chull and father Lee Kun-hee also had undergone prosecution probe, but they were not physically detained and later were pardoned. In the last slush fund investigation in 2008, Lee Kun-hee was tried without confinement. A remand action on Lee places the leadership in serious challenge as both Choi and Chang assisting Lee in the commanding chamber also would be preoccupied with investigation although without being detained.

Without the control tower, Samsung would likely maintain minimum status quo to keep the business running, said an official from the group.

Investors, however, were doubtful of the court granting the pretrial detention of Lee during its review on Wednesday. At 1:20 p.m., shares of Samsung Electronics were up 1.6 percent at 1,862,000 won ($1,582).

By Song Sung-hoon and Kim Dong-eun

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]