Samsung heir Lee Jae-yong inherits two chairman positions from his father

Posted on : 2015-05-16 15:12 KST Modified on : 2019-10-19 20:29 KST
With Samsung Group chairman Lee Kun-hee still in hospital, the process of succession is moving ahead

Samsung Electronics Vice Chairman Lee Jae-yong was appointed chairman of the board of the Samsung Life Public Welfare Foundation and the Samsung Foundation of Culture, positions that had been held by his father, Samsung Electronics Chairman Lee Kun-hee. With the son taking over two of the three positions from the elder Lee - chair of the two foundations and of Samsung Electronics - industry insiders are seeing this as a symbolic move that reflects the actual transfer of power.

In a meeting of the board of directors on the morning of May 15, the Samsung Life Public Welfare Foundation appointed Lee Jae-yong as chairman of the board to replace Lee Kun-hee, whose term as chairman was ending on May 30 and has been in a come since May of 2014, Samsung announced on Friday.

On the morning of the same day, the Samsung Foundation of Culture also held an extraordinary meeting at which it appointed Lee Jae-yong as the next chairman of the board. Lee Kun-hee’s term as chairman of the board for that foundation was not scheduled to end until Aug. 27, 2016.

The Samsung Life Public Welfare Foundation was established as the Eastern Social Welfare Foundation in 1982 and adopted its current name in 1991. Along with operating the Samsung Medical Center in Seoul, the foundation also runs a daycare program for low-income families.

The Samsung Foundation of Culture, which was set up in 1965 by Lee Byung-chul, founder of the Samsung Group and its previous chairman, operates the Leeum, Samsung Museum of Art

Lee Kun-hee was appointed chairman of the two foundations in 1988 and 1992, immediately after taking over the management of the Samsung Group.

After being investigated in 1995 for giving kickbacks to former president Roh Tae-woo (if office 1988-1993), Lee entrusted the Samsung Foundation of Culture to his wife Hong Ra-hee, director of the Leeum Museum, in 1996 and the Samsung Life Public Welfare Foundation to Lee Soo-bin, chairman of Samsung Life Insurance.

After being pardoned, Lee Kun-hee was reinstated at the Samsung Foundation of Culture, but in 2008, after a special prosecution of Samsung forced him to make a public apology, he handed the position over to Lee Soo-bin once again.

When Lee Kun-hee’s returned to management of the group in Mar. 2010, he retook the position of Samsung Foundation of Culture chairman in 2011 and of Samsung Life Public Welfare Foundation in 2012.

Considering that Lee Kun-hee remained chairman of the board at these two foundations except for those times when he could not because he was under investigation by the prosecutors, it can be inferred that Lee is highly attached to them. And now Lee Jae-yong, who is wielding management rights at the group in his father’s stead, has taken over those positions.

“Considering that it is not easy for Lee Kun-hee to fulfill his duties as board chairman for these foundations while he is in a hospital bed, the board members thought that it would be best for the position to be filled by Lee Jae-yong, who is best acquainted with the reason they were set up,” said an executive with the Samsung Group’s Future Strategy Office.

The Samsung Life Public Welfare Foundation and the Samsung Foundation of Culture hold shares in a number of group subsidiaries, including 2.2% and 4.7% respectively in Samsung Life Insurance. Furthermore, the shares that the Samsung Foundation of Culture holds in subsidiaries were increased and decreased in order to avoid paying inheritance tax during the transition in management from Lee Byung-chul to Lee Kun-hee. This has prompted suspicion that the foundation will be used in the same way when management rights are transferred this time.

“Considering that Lee Kun-hee and Cheil Industries already hold a 40% share in Samsung Life Insurance, it would be completely meaningless for them to use the foundation’s 6.9% share to secure or exercise management rights. There are no plans for the foundation to acquire any additional stock in group affiliates or to invest more of Lee Kun-hee’s stock in the foundation in order to reduce inheritance taxes,” an executive at Samsung said.

“We are planning to pay the inheritance tax fairly and transparently, as the law requires,” the executive added.

Solidarity for Economic Reform responded to the news by releasing a statement that said, “Samsung Electronics Vice Chairman Lee Jae-yong is not in a position of responsibility that is equivalent to the authority and influence that allow him to control management of the entire Samsung Group. Being appointed as chairman of the board at the two foundations without becoming a registered director at a listed company in the Samsung Group can be described as a dirty trick to inherit only the title of successor while avoiding the market’s assessment of his management ability.”

“Rather than becoming the chairman of the board of charitable foundations, Lee ought to have thought of a way to take on responsibility corresponding to his authority,” the group added.

By Lee Jeong-hoon, staff reporter

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