Samsung Chairman Resigns
Lee Kun-hee Apologizes to People, Employees
By Kim Yoo-chul
Staff Reporter
Samsung Group Chairman Lee Kun-hee said Tuesday that he will resign from the conglomerate to take full responsibility for the recent scandal that led him and nine other Samsung executives to be indicted.
``Today, I decided to step down as chairman of the group,’’ the grim-faced Lee said in a nationally televised press conference at the Samsung head office in Seoul.
``I will take all legal and moral responsibility and truly apologize for causing concern,’’ he said, adding that he will embrace all the wrongdoings of the nation’s largest conglomerate.
The announcement came days after a team of special prosecutors led by Cho Joon-woong indicted Lee and nine other executives on charges of tax evasion and breach of trust.
The independent body found that Lee had 4.5 trillion won hidden in bank accounts under other people’s names and charged him with evading 112.8 billion won in taxes. Allegations of bribery and a slush fund creation were not substantiated.
All of the hidden money will be used for ``a charitable purpose,’’ after paying the penalty tax, estimated at 580 billion won, Lee said.
Hong Ra-hee, Chairman Lee’s wife, will also quit her honorary posts linked to the Samsung group, including the Leeum Museum. Lee Soo-bin, chairman of Samsung Life Insurance, will now represent the group as temporary head.
The surprising announcement leaves many key questions unanswered. The chairman has yet to specify whether his only son, Jae-yong, will be his successor, or whether he will rejoin the group after the legal case, or retire completely. His departure does not solve Samsung’s ownership structure. Lee made no mention of ways to improve corporate governance.
He is expected to retain IOC membership.
Samsung Card will sell off its stakes in Everland, which is a de facto holding company for the group.
In 1987, Lee took control of the conglomerate, which has since grown to 59 affiliates, including the world’s biggest memory chip and flat-screen TV maker, Samsung Electronics. Samsung’s affiliates generate combined annual sales of over $150 billion, about 15 percent of the nation’s GDP.
In the press conference, Vice Chairman Lee Hak-soo, chief of the group’s powerful Strategic Planning Office, said the chairman’s only son, will also resign as chief communications officer of Samsung Electronics and work at one of Samsung’s overseas operations.
``More details about Jae-yong’s future work will be unveiled in May, when Samsung conducts a reshuffle of senior executives,’’ he said.
Samsung has already announced the dismantlement of the Strategic Planning Office, a group of some 90 officials who have been accused of helping the chairman manage his hidden assets and transfer control of the group's management to his son.
Vice Chairman Lee said he will retire after ``completing his remaining work,’’ along with President Kim In-joo, who is widely regarded as the No.3 man of the group for day to day operations. In another big shakeup, two heads of the group’s key financial units ― Hwang Tae-seon of Samsung Fire & Marine, and Bae Ho-won from Samsung Securities ― will also step down after being indicted.
Meanwhile, Samsung has made it clear that it will not seek the ownership of a bank, adding that it will study ways of converting the group into a holding company over the long-term. There has been widespread speculation that once the government eases restrictions, major family-run conglomerates would snap up local banks.