Tech giant Samsung Electronics is tightening board oversight on donations while two senior Samsung Group executives reportedly offered to resign, as the conglomerate struggles with the fallout from a graft scandal that led to its leader's arrest.
Samsung Electronics said on Friday its board of directors will now vote on any financial support to third parties worth 1 billion won (€834,442) or more and disclose any such payments publicly. Previously, only payments of 680 billion won or more were subject to board approval.
“This move improves transparency in financial aid and appropriation of social corporate social responsibility funds, and strengthens compliance management,” the company said in a statement.
The flagship of South Korea’s top conglomerate Samsung Group has been at the centre of an influence-peddling scandal that led South Korea’s parliament to impeach president Park Geun-hye in December.
Suspect
Ja y Y Lee, leader of Samsung Group and Samsung Electronics’ vice-chairman, was arrested last week after being named a suspect by the South Korean special prosecutor’s office. Lee is accused of pledging 43 billion won in bribes to a company and organisations backed by president Park Geun-hye’s confidant, Choi Soon-sil, to curry favour.
Though Samsung Group and Mr Lee have denied paying bribes to Ms Park or seeking improper favours, the conglomerate has pledged to take steps to improve transparency amid accusations and criticisms that Samsung used its financial might to game the system in its favour.
Mr Lee, who is arguing that he was coerced into making the payments, told lawmakers during a December hearing that Samsung Group would take measures to avoid making improper payments in the future.
“It appears that the things that vice-chairman Lee promised to do are being carried out now,” said Park Ju-gun, head of corporate analysis firm CEO Score.
Outside director
Samsung also said on Friday it was unable to nominate a new outside director for a vote at the March 24th annual shareholder meeting due to uncertain circumstances. The firm had in November promised to nominate at least one new board member with “global C-suite experience” as part of its efforts to improve corporate governance.
Separately, South Korea’s Yonhap News Agency reported later on Friday that Samsung Group vice-chairman Choi Gee-sung and president Chang Choong-ki have offered to resign to take responsibility for the graft scandal. Mr Choi and Mr Chang are also suspects in the special prosecutor’s investigation.
Samsung Group had no immediate comment to offer on the report when contacted by Reuters.
A potential exit by Mr Choi adds to questions about how the smartphones-to-biopharmaceuticals giant will operate in Mr Lee’s absence.
Insiders
Samsung insiders and former executives believed that after Mr Lee’s arrest Mr Choi, the number two at Samsung Group and mentor to the 48-year-old Mr Lee, would likely manage group-level affairs while professional managers continue running the various affiliates.
Mr Choi’s exit, if confirmed, would signal a change of guard and raise the possibility that heads of the various affiliates are given more autonomy to make business decisions, analysts said on Friday.
“I suspect there will be major changes at the CEO level going forward,” said Chung Sun-sup, head of corporate analysis firm Chaebul.com.
Samsung shares ended down 2.5 per cent on Friday, but are still up 6 per cent so far this year. – (Reuters)
