Samsung Chairman resignation raises sceptical comment
Updated
The sudden resignation of South Korea's Chair of Samsung Corporation has sent shock waves through the country. Lee Kun-Hee is facing criminal charges of tax evasion and breach of trust after an investigation into allegations of massive corruption at the group.
Presenter: Karon Snowdon.
Speakers: Jisoo Lee, Senior Analyst, Centre for Good Corporate Governance, Seoul.
KARON SNOWDON: Last week prosecutors indicted Lee Kun Hee on charges of breach of trust and tax evasion.
He had been the most prominent Samsung figure caught in a criminal investigation.
The allegations included that the company hid profits and maintained a 200-million dollar political slush fund to bribe public officials and politicians.
Although the lesser charges are still serious the prosecutors said they won't arrest Chairman Lee because it would cause enormous disruption in the company's operations.
Now after 20 years at the top, Lee has stepped down.
Such a scandal is all too commonplace in Korea, yet the resignation of the chairman of a so-called Chaebol is so unprecedented people are shocked.
Jisoo Lee is a senior analyst at the independent Centre for Good Corporate Governance.
JISOO LEE: Although this one was very serious scandal we're quite used to it, and often the case in the past even when those kind of scandals broke out there was no precedent that we saw that the head of the Chaebol company ever to step down from his or her post. So in that aspect I would say it's a very shocking event.
KARON SNOWDON: For the lawyers at the Centre for Corporate Governance Lee's resignation should be welcomed as a sign at least of contrition.
But analyst Jisoo Lee suspects it's a move to allow the air to clear ahead of a return as head of the company either by the Chairman or his son, who has been sent out of the country by his father.
JISOO LEE: Billions of dollars involved yes, so in that sense yes it was something that has to be done without doubt. But at the same time we are a bit concerned because we still cannot ascertain whether his stepping down has been pre-thought to avoid the public sentiment which is against Samsung these days, then after five or ten years he could come back or his son could come back any time.
KARON SNOWDON: Samsung has always been a family run affair.
It's been built into a conglomerate or chaebol of 60 companies which together account for a stunning 20 per cent of Korea's exports.
But the family, although extremely wealthy maintains control with a small shareholding managed through complex interconnected company structures.
One of the allegations against Chairman Lee was his manipulation of these structures to ensure his son takes over.
There's been some minor reforms announced at the company, but it's far to little, says Jisoo Lee.
He adds the prosecution of the case left much to be desired.
JISOO LEE: There was a special prosecutor nominated by the President but unfortunately they haven't done quite a good job. There are much more serious allegations than just trying to avoid taxes, that was measurement, how much we have made progress in terms of transparency, corporate governance practices. But unfortunately the result of the special prosecutor's office did not meet to our expectations, and this mega size scandal has a lot to do with the political situation that we are in.
KARON SNOWDON: And it's still the case that powerful people seem to be able to avoid serious charges?
JISOO LEE: I don't want to admit that but that's true.
KARON SNOWDON: The Centre for Good Corporate Governance is doing its own investigation into the possibility of bringing civil actions against affiliates of the Samsung Group of companies.
