Reuters - FACTBOX: A look at South Korea's powerful Samsung Group

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FACTBOX: A look at South Korea's powerful Samsung Group

Thursday, Apr 17, 2008 6:22AM UTC

SEOUL (Reuters) - A South Korean special prosecutor investigating corruption at the Samsung Group on Thursday indicted Lee Kun-hee, the head of the country's largest conglomerate for tax evasion and breach of trust.

Following are some key facts about the Samsung Group and the Lee family that founded and runs it:

THE BEGINNING

Samsung was launched in 1938 when Lee Byung-chul (1910-1987), the son of a wealthy landowner who was in the rice milling business, opened a trading company.

To increase revenue, Lee added a trucking business but Samsung, which means "three stars", did not take off until during and after the 1950-1953 Korean War when Lee added a textile company, started his country's first major sugar refinery and built a powerful trading network.

THE GREAT EXPANSION

In the 1960s and 1970's Lee adds a dizzying array of companies to the group that included the Shinsegae department store, the JoongAng Ilbo daily newspaper, a shipbuilder, a chemical company and most importantly, in 1969, Samsung Electronics. Several firms were later spun-off.

During this period, the family-run conglomerates known as "chaebol" formed a close alliance with the government run by authoritarian President Park Chung-hee to lift the economy. Samsung was an also-ran at this time with Daewoo, Hyundai and Lucky Goldstar, now known as LG, at the top of the pack.

THE TRANSITION

Lee Kun-hee, after being groomed for the top spot for years, officially took over when his father died in 1987. Father and son both went to university in Japan.

The younger Lee changed the focus of the company from one that mostly produced mass quantities of lower-end goods to one that would use innovation and superior goods to build a respected brand name.

Under his rein, Samsung became the country's largest conglomerate with about 60 affiliates, accounting for about one fifth of the country's exports.

Samsung Electronics became the world's biggest maker of memory chips. The group also includes Samsung Heavy Industries, the world's No. 2 shipbuilder, and South Korea's biggest life insurance company Samsung Life.

THE NEXT GENERATION

Lee Kun-hee's son, Lee Jae-yong, began working in a Samsung Group's division in 1991 and has spent many years with the flagship Samsung Electronics. Considered as the heir to throne, he is now chief customer officer at Samsung Electronics.

In 2005, a Seoul court found two former Samsung executives guilty of conspiring in a 1996 deal to help Lee Jae-yong and other children of Lee Kun-hee buy a majority stake in Samsung Everland, which serves as the group's de facto holding firm.

(Reporting by Rhee So-eui, editing by Jon Herskovitz and Sanjeev Miglani)