3 Samsung executives to go to jail

Guilty pleas, fines linked to price-fixing

March 23, 2006|By BLOOMBERG NEWS

WASHINGTON -- Three executives of Samsung Electronics Co., which was fined $300 million for fixing the price of electronic chips used in cellular phones and computers, agreed to plead guilty to price-fixing charges and serve prison terms for their roles in the global conspiracy, the Justice Department said yesterday.

The executives of the South Korean company, the world's largest chip maker, will plead guilty to participating in a scheme that included four other makers of dynamic random access memory, or DRAM, chips, the department said in Washington.

Sun Woo Lee, Samsung's senior manager of sales for DRAM chips, agreed to serve an eight-month prison term, while the other two will serve seven months, the government said. Each executive also agreed to pay a $250,000 fine and cooperate with the investigation.

Thomas O. Barnett, who heads the Justice Department's Antitrust Division, said an "active investigation" is continuing.

The two executives who agreed to serve seven-month prison terms are Yeongho Kang, associate director of DRAM marketing for Samsung's U.S. unit, and Young Woo Lee, its sales director in Europe.

Charges against the three were filed in U.S. District Court in San Francisco.

The price-fixing investigation has resulted in the convictions of two other companies besides Samsung and an agreement by a third to plead guilty, the Justice Department said. So far, the investigation has netted $731 million in criminal fines.

In all, 12 individuals have been charged. In return for alerting prosecutors to the scheme, a fifth company, Micron Technology Inc. of Boise, Idaho, wasn't prosecuted for its participation in the cartel.

The government said leading victims of the conspiracy include computer makers such as Dell Inc., Hewlett-Packard Co., International Business Machines Corp., Apple Computer Inc., Gateway Inc. and Compaq Computer Corp., now owned by Hewlett-Packard.

U.S. sales of DRAM chips were $7.7 billion a year, the Justice Department said. The chips also are used to make digital music players, video game consoles, printers and telecommunications equipment.

Earlier this month, four executives of another South Korean firm, Hynix Semiconductor Inc., were sentenced to prison terms ranging from five to eight months and fined $250,000 each. The company was fined $185 million.

Four executives of Infineon Technologies AG of Munich, Germany, pleaded guilty in December 2004 and served prison terms of four to six months. Infineon was fined $160 million.

Alfred P. Censullo, a regional sales manager for Micron, pleaded guilty to obstructing the government's investigation and was sentenced to six months of home detention.

Another DRAM chipmaker, Elpida Memory Inc. of Tokyo, agreed in January to plead guilty to participating in the conspiracy and pay an $84 million fine.

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