hankyoreh

the chairman of Samsung Group

Samsung Group Chairman Lee Kun-hee said on April 11 that he may consider stepping down from his management post as part of efforts to revamp South Korea’s largest conglomerate, which has been tainted by corruption allegations. The remark suggests there could be a major shift in Samsung’s management structure in the near future.

Samsung Group Chairman Lee Kun-hee was summoned by independent counsel Cho Joon-woong for a second round of questioning following an 11-hour session last week. After completing the five-hour inquiry, Lee said to reporters, “I am responsible for everything. I will assume full moral and legal responsibility.”

Lee also said that he would give serious consideration to revamping the group’s management system, “including myself,” he said. When one reporter asked him whether he would step down if prosecuted, he replied, “I will consider it.”

The independent counsel decided to indict the 66-year-old Lee without arrest on charges of inflicting damage on Samsung Everland and Samsung SDS by ordering the group’s two affiliates to sell convertible bonds and bonds with warrants, respectively, to his son Jae-yong at below-market prices as part of a father-to-son management transfer.

The other charges being investigated by the specially-appointed independent counsel include allegations that Samsung hid slush funds in the accounts of its executives and used the money to bribe public officials and others.

Unlike the first summons on April 4, when he bluntly denied the allegations against him, the stern-faced Lee made no comments upon arriving at the office of the independent counsel at 2 p.m., questions asked by a throng of journalists went unanswered as he went up to the independent counsel’s office. Prior to Lee’s second summons, Yun Jong-seok, a representative of the independent counsel, said, “We will ask about allegations that were not sufficiently investigated.”

During the April 4 session, the independent counsel was believed to have grilled the Samsung chairman intensively about whether he ordered, or to what extent he knew about, the bond transactions at Samsung Everland and Samsung SDS, after reaching a conclusion that there had been group-wide collusion to accomplish the deals. An official working with the independent counsel said, “We plan to indict Chairman Lee on the two cases.”

With Lee summoned for the second time, the special investigation into allegations against Samsung has virtually neared its end. The independent counsel’s team, which was due to officially end its probe on April 23, is scheduled to announce the final result of its investigation on April 18 or 21. Before Lee is formally indicted, the independent counsel wanted tocus on confirming information he felt was incomplete.

Investigators also questioned Lee about the sale of Samsung Everland convertible bonds and Samsung SDS bonds with warrants. The independent counsel seems to have reached the tentative conclusion that the deals were made primarily by Samsung’s corporate restructuring headquarters, which is now known as the strategic planning division and was originally formed with close confidants of Lee.

An official on the independent counsel’s team said, “We confirmed that the corporate restructuring headquarters was involved and directed the overall management transfer, including the e-Samsung case, involvement with which it had previously been cleared.” With regard to the Samsung SDS case, the independent counsel plans to indict Lee on charges of embezzlement.

In addition, the independent counsel quizzed Lee about how a massive amount of funds from Samsung Electronics came to be deposited in portions of some 1,300 accounts at Samsung Securities held under the names of Samsung executives. Lee had previously said that he used the Samsung Securities accounts to manage wealth he inherited from his father, founder Lee Byung-chul. However, Lee was believed to have told the investigators that he had no idea about the allegation because his financial officials are responsible for managing his assets. In the process of analyzing some 700 borrowed name accounts, the independent counsel found that Samsung Electronics diverted a huge amount of company money between 2003 and 2005 by disguising it as bonus payments. If the money is confirmed to be slush funds, the special prosecution plans to indict Lee on charges of embezzlement and misappropriation.

Upon his departure, a group of former Samsung SDI employees shouted, “Arrest Lee Kun-hee!” Lee gazed at the demonstrators and allowed himself to be photographed. Lee responded with a near smile to questions from the nearly 250 domestic and foreign journalists who had flocked to report on Lee’s second summons.

Please direct questions or comments to [englishhani@hani.co.kr]