The most powerful tycoon in South Korea has fallen on his sword after a damaging investigation into his business affairs and an indictment for tax evasion.

The departure of Lee Kun Hee, the secretive 66-year-old patrician chairman of the Samsung industrial conglomerate, leaves a power vacuum at the country's most important company.

Through its 59 operations, Samsung's tentacles stretch into nearly every aspect of Korean industry, from property and mobile phones to flatscreen televisions and hospitals.

The group accounts for a fifth of South Korea's exports, 15 per cent of its gross domestic product and a fifth of the market capitalisation of the Seoul exchange's Kospi Index.

Mr Lee's decision to step down, which some analysts believe may herald a shake-up of Samsung's notoriously complex corporate structure, was accompanied by several other key management resignations.

Analysts who cover Samsung Electronics said that the resignation would have little impact on the day-to-day running of that side of the business.

However, as well as raising questions on the future of the Samsung group, which has hinted that it may adopt a holding company structure, analysts have speculated that the resignation could be prove destructive to the wider South Korean business environment.

The resignation of Mr Lee and the banishment of his son to one of the group's overseas operations strikes a blow to the fundamental principle of South Korea's chaebol conglomerate structure: that control should pass down through the founding family.

Mr Lee may retain a strong influence over the company beyond today, and his son may assume outright control of the group eventually, but for the first time in 40 years Samsung is under the control of professionals, not scions.

The high drama of the resignation was in keeping with Mr Lee's extraordinary status within Korean society.

Breaking regular television viewing to deliver a brief speech live, Mr Lee's resignation stopped the nation.

“I am truly sorry for causing so much concern with the investigation,” he said, referring to the long bribery and tax-evasion probe that has shaken the company to its core, “I will assume full legal and moral responsibility.”

Bowing deeply, but with no visible expression on his face, the man idolised by Korean business leaders added that he was “saddened, as there is still much to do and a way to go”.

The resignation comes less than a week since Mr Lee was indicted for evading $113million in taxes and for breach of trust while trying to cede future corporate control to his son Jae Young Lee.

If convicted, Mr Lee could face a lengthy prison sentence, although investigators were unable to prove the main target of the investigation - that Samsung had a slush fund to bribe bureaucrats, judges and politicians.

Both Mr Lee and his wife have been questioned over a variety of allegations.

In contrast with previous investigations of South Korean chaebol, this inquiry stemmed from the allegations of a whistleblower in the company's legal department.

Many analysts pointed out, however, that Mr Lee and his family would maintain enough influence over Samsung's direction.

Analysts said that the restructuring plan and the resignations did not alter the corporate governance structure of the group, nor pass ownership outside the Lee family.

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