Samsung’s legal compliance monitoring committee recommends Lee Jae-yong publicly apologizes for illicit behavior

Posted on : 2020-03-12 17:56 KST Modified on : 2020-03-12 17:56 KST
Observers wait to see how committee’s request affects court’s sentencing
Samsung Electronics Vice Chairman attends the third hearing of his bribery and corruption trial at the Seoul High Court on Dec. 26, 2019. (Kang Chang-kwang, staff photographer)
Samsung Electronics Vice Chairman attends the third hearing of his bribery and corruption trial at the Seoul High Court on Dec. 26, 2019. (Kang Chang-kwang, staff photographer)

The Samsung Group’s legal compliance monitoring committee has recommended that Samsung Electronics Vice Chairman Lee Jae-yong personally apologize to the South Korean public for his illegal efforts to take over control of the group and for the company’s suppression of labor unions. Considering that several trials and investigations into those issues are currently underway, the next question is how the committee’s request and Samsung’s response may affect the court’s sentencing in Lee’s criminal trials.

The key recommendations made by the compliance committee on Mar. 11 are for Lee to “show remorse and apologize for” the alleged illegality connected with inheriting control of the group and to “declare to the nation” that he won’t “violate legal duties in the future.” The committee furthermore recommended to seven group affiliates “not to infringe upon the interests of other stockholders in order to further the interests of certain controlling stockholders,” referring to members of the Lee family, which controls the Samsung Group. It’s likely that Lee will soon be acting on the recommendations by making a public apology and announcement.

The committee explained that its recommendations were based on its conclusion that “the disgraceful things that have occurred at Samsung have generally been connected with the succession issue.” Following its launch on Feb. 5, the committee has been briefed by major group affiliates, including Samsung Electronics, and has been investigating various allegations.

Some see the recommendation for Lee to personally apologize as representing a step forward. But on closer inspection, several aspects of the recommendations look more dubious. First of all, many of the criminal facts of the “alleged” efforts to inherit control of the group and suppress labor unions that the committee wants Lee to express remorse for have already come to light, and key executives in the group have even received prison sentences as part of the ongoing judicial procedures. In August 2019, the Supreme Court recognized that Lee was guilty of giving bribes, identified quid-pro-quo in the management succession, and remanded his case to a lower court, where it is currently being reviewed.

In short, these allegations don’t constitute new information that the committee has learned through briefings or internal tips at Samsung over the past month. In fact, the prosecutors asked the committee to provide any documents that might turn up in their investigation of past issues, including the illegal succession, but as of Wednesday, five weeks had passed without the committee providing a response. Even if Lee makes a public apology, therefore, his words may well be seen as empty.

Recent actions at Samsung are also raising questions about the credibility of the committee’s recommendations. The board members that major group affiliates have nominated leading up to stockholders’ meetings this month are proving controversial. Samsung Biologics means to reappoint CEO Kim Tae-han, despite his implication in alleged accounting fraud at the company. Furthermore, the outside directors nominated by Samsung SDS and Samsung SDI include university professors who submitted amicus briefs to the courts claiming that there was nothing wrong with the swap ratio for Cheil Industries and Samsung C&T and that the accounting at Samsung Biologics was aboveboard. This is leading to accusations not only that these professors have a conflict of interest, but also that they’re being rewarded for taking Samsung’s side.

Though Samsung said it would carefully review the committee’s recommendations and indicated its willingness to accept them, its words don’t seem to line up with its actions. The committee’s inherent limitations are another factor raising doubts about the sincerity of the recommendations. The committee was formed at the request of the court that’s hearing the remanded bribery case against Lee, a case that could force his removal from management. Hon. Chung Jun-yeong, with the 1st criminal division at the Seoul High Court, has openly said that he’ll take the results of the committee’s activity into account in the sentencing process. If Lee acts on the committee’s recommendations and the court follows through on its promise to take it into account, it would be hard to avoid the conclusion that the concerns that have plagued the committee since its inception — namely, that it was designed to get Lee a lighter sentence — have become a reality.

“If Lee’s guilt for past mistakes is confirmed in the court of law, he ought to pay the penalty for what he did. Not only do these recommendations lack any concrete steps, but the committee has ignored the fact that Samsung didn’t show any remorse for its past mistakes during the investigation. It’s also failing to prevent such mistakes [from being repeated] in the future,” said Kim Woo-chan, a professor at Korea University and director of the Economic Reform Research Institute.

By Song Gyung-wha, staff reporter

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