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| Samsung Electronics Vice Chairman Lee Jae-yong enters Seoul High Court for the re-hearing of a bribery case, Jan. 18. Yonhap |
By Baek Byung-yeul
It has been four years since Samsung Group abolished the group's control tower Future Strategy Office in what seemed to be an effort to end old practices of crony capitalism.
Ever since then, Samsung has made progress in its management system by strengthening independence of its affiliates and forgoing no-union policies. But an industry official said Sunday that uncertainties over group management are still in play as its leader Lee Jae-yong has been imprisoned.
They said Samsung Group has reinforced self-regulatory management after dismantling the control tower, by setting up three small group systems ― for Samsung Electronics and other IT affiliates; non-electronics affiliates including Samsung C&T; and financial affiliates such as Samsung Life Insurance.
It also established a compliance committee in 2020, to monitor the group from a legal and ethical perspective as part of the conglomerate's efforts to enhance transparent management.
"It's hard to tell if the absence of the control tower or its leader is the group's long-term business plan as the group affiliates have managed themselves well amid growing business uncertainties posed by the COVID-19 pandemic," an industry official from one of the conglomerates here said.
"However, it is also true that the group has been limited in making decisions for large investments or bringing radical changes in its management structure and succession issues."
Samsung's Future Strategy Office had handled all key decisions, including reshuffles of top management and investments on group units, for the previous 58 years, but at the same time, some investors had criticized the unit for being a medium for cozy relations between political and business circles.
In response to the criticism, Samsung leader Lee told lawmakers during a National Assembly hearing in December 2016 that he would dismantle the Future Strategy Office and the group announced its disbandment on Feb. 28, 2017.
After the announcement, some 200 employees in the unit, including 60 executives dispatched from affiliates, were returned to the Samsung units where they originally worked, and responsibility for personnel reshuffles at subsidiary firms were transferred to each affiliate's board of directors, according to group officials.
While Samsung has tried to improve transparency in its governance system, its leader was convicted and imprisoned in 2017 after being found guilty of paying bribes to former President Park Geun-hye and her confidant Choi Soon-sil.
He was released in 2018 after the Seoul High Court suspended the sentence, but the top court ordered a re-hearing of the trial in 2019 and an appellate court handed him a prison sentence of two and a half years in January. The sentencing came at a crucial point given Lee is now on his own leading Samsung after his father Lee Kun-hee passed away last year.
In his message from behind bars, Lee vowed to continue his support for the activities of the group's compliance committee, a move to fulfill his pledge to enhance management transparency.
Lee has encouraged the compliance committee to play its role as a watchdog in ensuring Samsung abides by the law and improves management transparency. The compliance committee has looked at three issues ― the group's attitude to unions, management succession and communication with civic organizations ― as key points to improving the conglomerate's business compliance.
After the committee's recommendation, Lee issued a public apology saying he wouldn't seek to pass on management of the conglomerate to his children and would work to facilitate active communication between management and any union.
