'Samsung won't seek family governance'
Samsung Electronics Vice Chairman Lee Jae-yong bows before a nationally-televised apology over the company-involved past various wrongdoings at Samsung Seocho Tower, Wednesday afternoon. Yonhap
By Kim Yoo-chul
Samsung Electronics Vice Chairman Lee Jae-yong, the de-facto head of the country's most-powerful conglomerate, said Wednesday he will lead the changes needed to the group's web-like holding structure, vowing not to pass on the management to his children.
“I will not pass the company's management on to my children. This was always my idea, but I've been hesitant to share and open up on it, because I think it's not right to talk about issues relating to management succession before a thorough evaluation of my managerial ability, as Samsung is facing an unfavorable business environment,” Lee said in a nationally-televised statement from Samsung Seocho Tower in which he issued a formal apology.
“I am offering my sincere apology to the public. Yes, Samsung and I have been criticized over succession-related issues. Specifically, I was the center of criticism over Samsung Everland and Samsung SDS issues. Also, hearings are going on because of alleged bribery related to the management succession,” Lee said.
“Much of the controversy about Samsung and myself originally arose from these issues. Let me be clear. There won't be any more controversies about management succession. There won't be any activities that break the law. There won't be any activities against ethics and there will be no favors. I will only focus on doing things to improve corporate value.”
The apology came after the Samsung Group's external compliance committee recommended Vice Chairman Lee announce details regarding improvements to group-wide management transparency.
Wednesday's public apology is the first since one made in June 2015, when Lee apologized over a Samsung hospital's apparent mishandling of the Middle East Respiratory Syndrome (MERS). The vice chairman didn't take any questions from reporters and left the room packed with hundreds of local and foreign correspondents.
“I would take this opportunity to share my deepest thoughts on issues. After Chairman Lee was hospitalized, I've done everything that I could and had to do. However, my efforts brought quite mixed results and it's hard to say I am proud of them. I am hoping to take Samsung to the next level. Through tireless innovation and improvements in technologies, Samsung will focus on the businesses that we do best. However, I will accept the challenge of expanding Samsung's footsteps into new business areas,” Lee said.
In addition, he also apologized over the group's long-time reluctance to guarantee the activities of unions. “No union management” has long been embraced as a Samsung criteria, pushing its employees and executives to strictly focus on given tasks. “I will guarantee free activities of unions inside Samsung units,” Lee said.
But the vice chairman didn't give any details on what the expected new holding structure for Samsung would be. The group currently has a complex ownership structure with cross-holdings among affiliates that enable the founding family to control the business with a very small stake in direct ownership. Specifically, the cross-holdings involve one group firm having a large equity stake in another. Samsung Life is the single largest shareholder of Samsung Electronics and Samsung Life belongs to the Samsung group.
Lee made it clear that Samsung will let experienced executives who have high expertise and insight manage the group's core businesses. “Only the best-level management can guarantee Samsung's growth. This is the sense of crisis that I have. Samsung has to hire proven personal regardless of sex, education level and nationality. These recruited personnel should work hard with greater loyalty and get a better position than me in managing the group's core businesses.”
The vice chairman is facing a re-hearing at a high court of influence-peddling charges, for which he spent almost a year behind bars from 2017 to 2018. Lee has a huge influence over Samsung Electronics despite holding a small fraction of its shares and no longer being a board member, because of the ownership structure established around other group affiliates and holdings of his family members including sisters Lee Boo-jin and Lee Seo-hyun.
But it is still unclear who will represent the family's core interests if Lee is sent back to prison.