Highlights:
- Jay Y. Lee apologised for his company’s role in succession scandal pledging this will end
- He said his children will not become the top executives of Samsung
Lee Jae-yong (Or also known as Jay Y. Lee), who is the Vice Chairman of Samsung Group issued a personal apology for his company’s role in a succession scandal which shook South Korea. He pledged that he will not hand over the leadership of the company to his children. This was an unusual public sign of contrition from the most powerful conglomerate of South Korea.
At a briefing today at Samsung’s headquarters, Lee admitted to his missteps in the past and vowed that will avoid any violation of the law in the future.
Lee’s promise suggests that the leadership of South Korea’s biggest conglomerate, which was founded by his Grandfather, will not get passed on to the 4th generation automatically.
The 50 year old Harvard alumnus said, “We are recognized for our top-class technology and products, but the public view of Samsung is still critical,” and added that “This is all because of our shortcomings. This has been my fault and I offer my sincere apology.”
Lee has been entangled in the allegations for years which he used horses and financial contributions to win favours, via an intermediary, from then President Park Geun-hye to help with the succession as the new chief of Samsung.
This scandal led to Park’s impeachment back in 2017 and she was sentenced to 25 years in prison. This also led to anger in public over the power of South Korea’s conglomerates which triggered elections of a reformer as her successor.
Lee’s apology could help heal Samsung’s image which improved after the tech giant publicly went ahead with a series of efforts helping South Korea in fighting the novel Coronavirus.
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The legal battle has cost Lee his tenure at the control of Samsung Electronics Co., which is World’s leading manufacturer of memory chips and smartphones. Lee became a de-facto after his father suffered a heart attack back in 2014, however, he was impriosened for 1 year in 2017.
Lee returned to the court for a retrial in 2019 when the scope of alleged wrongdoing was revised and now he again faces the possibility of another jail term.
Lee said, “I give my word here today that from now on, there will be no more controversy regarding succession. There will absolutely be no infringement against the law,” and added saying, “There will be no leaning on legal expediency or actions that cause ethical reproach. My sole focus will be on enhancing the corporate value of Samsung.”
Lee’s tone during the briefing was very different from the past. He and Samsung, both, has insisted repeatedly that they had not done anything wrong.
Park Ju-gun, President at CEOScore, corporate watchdog, said, “It is symbolic that Korea’s top company will separate ownership from management,”.
Lee also apologised for Samsung’s stand against the unions which was a long running field of controversy for the company.
He said, “At Samsung, the labour culture did not move in step with the times,”. “From now on, I will make sure that Samsung is not criticized for ‘union-free management’.”
Samsung C&T Corp., which is the de facto holding firm for the Samsung empire swelled by as much as 6.6% ahead of the Korean market index.
Lee Sang-hun, a senior analyst at HI Investment & Securities said, “Samsung C&T shares rose on expectations that Lee may not go back to jail again, relieving uncertainties over trial issues,” and added, “Through today’s presser, Lee showed his leadership and sought to boost corporate image.”
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The appeals court which decided to release Lee is expected to rule on his final sentence in a coming couple of months. Unless some new piece of evidence emerges during the retrial, the appeals court is, most probably, going to rule in line with the decision given by the Supreme Court of South Korea which has found Lee being using horses and money to bribe President Park to seek political support.
This will mean alterations in the current suspension of Lee’s prison sentence.
The total amount of the alleged bribery which was determined by the Supreme Court carries a minimum sentence of 5 years and this sentence cannot be suspended the way Lee’s existing sentence was. Media coverage in South Korea has centered on Article 53 of the Korean Criminal Act which specifies that there could be a discretionary mitigation punishment “when there are extenuating circumstances.”
In Lee’s case, the damage to Samsung — crucial as it is to Korea’s economy — could be presented as grounds to keep him out of prison.
Lee did not exercise the extension of his 3 year term on the Samsung Board. However, he is keeping his title of Vice Chairman even though it will be the board who will drive the overall management decision.
Park from CEOScore said that the reason why Lee has apologised is that he has been under a lot of pressure from others and have been asked to demonstrate contrition after the years of scandal. Park said, “Lee himself has been struggling with succession under Korean law,” and added, “But today’s announcement was weak. He didn’t say he’d take away the Lee family ownership at Samsung.”
