hankyoreh

Lee Bu-jin and Lee Seo-jin

“Considering that there have been no problems with company management, I would like to satisfy your curiosity about why we are restructuring our business divisions. [. . .] There are two things that are holding the Samsung Group back, and one of them is the regulations about ‘work funneling’ inside chaebol. [. . .] We have been thinking about a number of ways to get around these regulations. The conclusion we have reached is to split up our catering division and to transfer our facility and property management divisions to our affiliates. We already transferred the fashion division at Cheil Industries to Everland.”

The remarks were made in a presentation that a general manager at Samsung Everland (currently Cheil Industries) named Chun made to company employees in an auditorium at a serviced apartment in Seoul on Nov. 5, 2013. The Hankyoreh acquired a video recording of the presentation on Feb. 10.

During the presentation, 980 employees working in the facility management and property management divisions at Samsung Everland were informed that they would be reassigned to S-1 Corporation. Chun also used the presentation to explain that another reason for reorganizing company structure was to eliminate various liabilities for Samsung Electronics Vice Chairman Lee Jae-yong, including the taxes that he owes.

After the business was restructured for the benefit of the biggest stockholder, the employees who were reassigned to a different company filed a lawsuit for compensation with the Seoul Central District Court. Because of the reassignment, they did not receive company stock when it was publically listed some time later, and they were also excluded from the IPO profits.

On Feb. 10, 252 of the approximately 900 workers who were transferred to S-1 filed a lawsuit against Cheil Industries asking for 33.29 billion won (US$30.35 million) in compensation.

“More than half of the plaintiffs had been working for more than 10 years. Some had even been there back when Everland was still called Donghwa Real Estate. When the company was restructured, we were sacrificed for the benefit of the major stockholder,” one of the plaintiffs said.

“If I had not been transferred to a different company, I could have received between 100 and 200 million won (US$91,160 and US$182,320) in profit because of my 10 years of continuous employment. But the important thing is to show that we won‘t stand to be abandoned like this,” the plaintiff added.

Along with these plaintiffs, some of the 2,000 workers who were transferred from the catering and grocery divisions at Everland to Samsung Welstory are also planning to file a similar lawsuit within the week.

“Company stock was distributed to employees in accordance with the law. Upon the delivery of the lawsuit notice, we will study the complaint and respond in an appropriate fashion,” a representative for Cheil Industry said in regard to the lawsuits.

“When the business restructuring was announced, Samsung Everland had not made any plans to go public.”

By Lee Jeong-hun, staff reporter

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