Tuesday, February 07, 2006

Samsung Chairman to Embrace Compliance

Watchers of Korean Big Business, cover Samsung and its family management carefully. This article on Samsung's head Lee Kun-hee highlight recent events. The article stresses Samsung's desire to comply with government regulations and regrets its past actions.

A contrite Samsung Group chairman Lee Kun-hee has decided to fork out $800 million from his own pocket as an unconditional donation to society. The group will also separate its legal affairs office from the restructuring department, leading to further downsizing of the department whose personnel already shrank from 150 to 98 in January. Samsung said Tuesday it will do further penance by supporting a watchdog consisting of prominent figures and ensure independent management of its affiliates.

The Samsung Group, which miraculously escaped the long arm of the law in a series of scandals last year, vowed to withdraw all legal action it has brought against the government, including a constitutional petition over a fair trade law that restricts the voting rights of a company's financial subsidiaries and suit against a gift tax on bonds issued by Samsung SDS.

Samsung vice chairman Lee Hak-soo on Tuesday announced the decisions at the group'’s headquarters in Taepyeongro, Seoul. Lee told reporters the group is ready to embrace new provisions in the Financial Industry Restructuring Law and the Financial Holding Company Law once they are passed in the National Assembly. The group, whose Byzantine cross-ownership structure is the stuff of legend, has opposed them so far saying they threaten the rights of Samsung Electronics and other key subsidiaries.

The vice chairman said Lee Kun-hee and other executives had come up with the measures to make restitution to the public for dubious business practices in the past and to accommodate public criticism. We made these decisions to express our deep regret for causing a stir in society over inheritance matters, he said.

The group has been rapped for the transfer of bonds in the firm's quasi-holding company Samsung Everland, allegedly to ensure the succession of Lee's only son. The vice chairman added Samsung will invest $21 billion into new businesses and hire 20,000 new staff this year.

The measures are the most tangible evidence yet that the group, which has often been accused of considering itself above the law, is willing to mend its ways and adjust to a modern approach to corporate governance.

I have devoted all my energy to managing the company, but failed to grow with society and live up to the public's expectations, the vice chairman quoted Lee as saying and apologized for the group's misdeeds.

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