[Photo by Yoo Dae-gil = dbeorlf123@ajunews.com]
Samsung, South Korea's top conglomerate, announced an overhaul of its entangled group structure ruled by one man to enhance transparency in management and decision-making as the arrest of its de facto head on bribery charges sent its global brand image nosediving.
The revamp focused on disbanding the future strategy office, a group-wide control tower which has been used by Samsung leaders to facilitate their handy control across the sprawling business empire for decades.
The announcement coincided with the indictment of Samsung Electronics vice chairman Jay. Y. Lee and four other executives for bribing President Park Geun-hye's crony, Choi Soon-sil, on the final day of a sweeping probe that began on December 21 at the height of massive anti-government protests.
The only son of Samsung Group's bedridden patriarch Lee Kun-hee, 74, became the first business leader to be tried. The junior Lee was arrested on February 17 and accused of donating or pledging some 43 billion won (38 million US dollars) to Choi, who is on trial for meddling in state affairs and pocketing money from top conglomerates.
Theoretically, dozens of Samsung affiliates would be given autonomy, making their own business decisions through board meetings, though experts predict they may require any form of strategic coordination on key affairs. There will be no weekly meeting of top executives.
The future strategy office will disappear permanently with about 200 elite members going back to group units. Its head, vice chairman Choi Gee-sung, and president Chang Choong-ki have already resigned over allegations that Lee used it to collect and make cash donations to organizations controlled by Choi.
The scandal fanned public sentiment against corporate donations, which have long been a controversial issue in South Korea due to concern about collusive ties between businessmen and politicians.
From now on, Samsung Electronics will not make illicit donations. A sponsorship contract worth more than one billion won should be screened and approved by its board. Without group intervention, the board of Samsung SDI on Tuesday named Jun Young-hyun, the head of Samsung Electronics memory chip division, as CEO of the battery-making affiliate.
But it remains to be seen how Samsung will coordinate crucial group-wide affairs such as the transfer of leadership from Lee Kun-hee to his son and the proposed realignment of group units.
Samsung has promised to change the structure of corporate governance into a system controlled by a holding company and focus on futuristic businesses like bioengineering, smart auto parts, batteries. Analysts predict the group may have to put off its planned business realignment.
Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
