hankyoreh

Samsung headquarters in Seoul’s Seocho district. (by Kim Bong-kyu

Starting with the sudden dismantling of the Future Strategy Office (FSO), which had coordinated business at the Samsung Group, on Feb. 28, there have been a number of peculiar developments at the group. According to several former employees at the FSO who spoke with the Hankyoreh on Mar. 13, seven former team leaders (at the level of president or vice president) were not given positions as consultants or advisors. Samsung typically continues to pay executives part of their former salary for two or three years after they resign, giving former presidents the title of consultant and former vice presidents and below the title of advisor.

Also gone are the predictions that some of the FSO team leaders would eventually be reinstated (except for FSO director Choi Gee-sung and deputy director Jang Choong-gi, who have been indicted on charges of giving bribes by Special Prosecutor Park Young-soo). The former FSO team leaders have reportedly told their friends that they are gone from Samsung for good and that they are currently unemployed. Some of the team leaders reportedly even shed tears as their employees comforted them at their going away parties.

The dismantling of the FSO and the resignation of all the team leaders took place abruptly. While Lee Jae-yong had promised to shut down the office during a hearing about the Choi Sun-sil scandal at the National Assembly on Dec. 6, 2016, hardly anyone expected that it would happen on the day that the Special Prosecutor’s period of investigation came to an end. This also defied predictions that the group would minimize the shock of losing the FSO (which was essential to the group’s operations) by relocating some of its functions to three major group affiliates - Samsung Electronics, Samsung C&T and Samsung Life Insurance. The prevailing view in and around the group is that Lee told a senior executive who visited him on the weekend before the announcement that they shouldn’t drag things out. Even inside the FSO, no one knew about that the FSO team leaders were going to resign until the morning of the day that their resignation was announced. “Aside from the director and the deputy director, I was under the impression that all the team leaders would be moving to positions at the affiliates they had originally been working for. Things changed all of a sudden that morning,” said a former executive at the FSO.

Inside Samsung, the phrase used to explain the sudden dismantling of the FSO, the resignation of all its team leaders and their exclusion from the normal perks given to former executives is “the wrath of Lee Jae-yong.” “We became anathema - we were all doomed,” said one former team FSO leader who was explaining the atmosphere of reproach.

The announcement of the dismantling of Samsung’s government liaison office also reflected Lee’s feelings. Hardly any of the other groups were aware of the existence of Park Geun-hye’s secret advisor Choi Sun-sil until allegations were raised about the establishment of the Mir and K-Sports Foundations in Sep. 2016. But Samsung had already determined who Choi was through its powerful intelligence network, and its attempt to use this information to receive assistance with the transfer of group control to Lee brought this crisis upon itself.

That’s why Jang Choong-gi, the FSO deputy director who had long handled Samsung’s intelligence gathering and government lobbying work, is thought to bear the most responsibility for the crisis. Sources with the Special Prosecutor say that Jang‘s confiscated mobile phone contained several years’ worth of telephone records, text messages and Kakao chat logs. This means that Jang, despite being in charge of security, failed to replace his mobile phone every six months as the other senior executives at the FSO did for security reasons and thus left behind crucial evidence.

Another attention-grabbing development is the consecutive resignations of Lee Jae-yong‘s mother Hong Ra-hee, director of the Leeum Samsung Museum of Art, and her younger sister Hong Ra-young, deputy director of the museum. Even when Hong Ra-hee announced her resignation on Mar. 6, it was reported that she was strongly motivated by the desire to “lay everything down,” given the fact that her son was in jail. But with the abrupt resignation of Hong Ra-young two days later, there is a growing sense that Lee Jae-yong’s wishes played a major role in these resignations. Since JTBC started producing a series of reports about Samsung’s preferential deals with Choi Soon-sil in Oct. 2016, Lee has been very upset with his uncle Hong Seok-hyun, JTBC Chairman, and other members of his mother’s family, according to sources inside Samsung. Another possibility is that Lee ordered the resignations in an attempt to curtail the influence of his mother’s family given the possibility that his absence from group management may be prolonged.

“Lee Jae-yong may well be wondering what on earth [the FSO] was doing that put him in jail. Even so, there are concerns that his handling of affairs is too emotional and off the cuff,” said a former senior executive at Samsung.

By Kwack Jung-soo, business correspondent

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