hankyoreh

Samsung Group announced yesterday a range of structural reform measures, including the resignation of its Chairman Lee Kun-hee. The 66-year-old business tycoon said in a trembling voice, “Today, I decided to resign as chairman of Samsung Group.” Lee has been at the helm of Samsung Group for more than two decades since he took the job following the death of his father and group founder Lee Byung-chull in December 1987.

Samsung also decided to dismantle its powerful strategic planning office, which has played a key role in Samsung’s management structure for the past five decades. Vice Chairman Lee Hak-soo and President Kim In-joo also resigned from their positions. Samsung affiliates will run their business independently, while group-wide affairs will be decided by a meeting of the respective directors. Jae-yong, the only son of Chairman Lee, will also step down from his position as Chief Customer Officer and spend time accumulating field experience abroad. Still, experts say there will be little change to the father-to-son power transfer scheme at Samsung.

Chairman Lee Kun-hee, Vice Chairman Lee Hak-soo and other leaders of the group made the announcement at a press conference in central Seoul on April 22.

“I apologize for causing the special investigation. I will take all legal and moral responsibility,” Lee said, adding that he will step down as the head of the business conglomerate. He said, “Among other things, the help from you and society contributed to what Samsung currently is ... I hope that you continue to cherish and help Samsung so that it can grow into the world’s leading business group.” Lee will resign from all Samsung-related positions. He is the chairman of Samsung Electronics, holds the position of director at a number of affiliates and is the chairman of the Samsung Foundation.

Vice Chairman Lee made it clear that Samsung will not join the banking industry and announced that the group will prepare institutional measures to boost the transparency of its financial affiliates, including Samsung Life Insurance, Samsung Securities, and Samsung Fire and Marine. Hwang Tae-seon, the president of Samsung Fire and Marine, and Bae Ho-won, the president of Samsung Securities, will also step down, taking responsibility for Samsung’s having opened bank accounts under the names of its executives. Lee continued that Samsung Card will sell off its stakes in Everland, the group’s de facto holding company, within four or five years to stop cross-affiliate holdings. Regarding reform of the management structure itself, however, he just said that the conglomerate would look for “the best management structure.”

Figures linked to the group will be excluded from the procedure used to appoint outside directors, according to Chairman Lee.

Hong Ra-hee, Chairman Lee’s wife, will also quit posts connected with Samsung Group, including her position as the director of the Samsung Leeum Museum.

The funds hidden in the dummy bank accounts will be used for “a beneficial purpose” once taxes are paid, and will not be used by the chairman’s family. Though it was suspected that these funds were used to bribe public officials at the highest echelons of society, the independent counsel cleared the conglomerate of the allegation. The Samsung chairman claimed in the course of the investigation that the money was his and was part of his inheritance from his father, the Samsung founder.

As the strategic planning office will be dismantled, Samsung will convert to an independent management system. Lee Hak-soo, the chief of the powerful office, remarked that top executives will make decisions in conjunction with a board of directors and shareholders from its independent subsidiaries.

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