SEOUL, Aug. 27 (Yonhap) — Ensuring that Samsung Group adheres to compliance and ethics is becoming a core part of the company’s corporate culture, its compliance committee chairman said, as its management has learned the hard way that unethical business practices can come with a hefty price tag.
“The idea of having the compliance committee review any potentially sensitive issues has become engrained in Samsung,” Chairman Lee Chan-hee stated during a recent interview with Yonhap News Agency.
“I think management now realizes that following the law is much more beneficial for doing business. They paid a steep price for giving in to short-term gain and political influence,” he added.
Last week, the independent corporate compliance oversight committee recommended that the group rejoin a business interest group it had withdrawn from years ago following a high-profile corruption scandal involving its de facto leader Lee Jae-yong and the ousted former President Park Geun-hye.
However, the recommendation came with strings attached: Samsung should leave the Federation of Korean Industries (FKI), the country’s largest business lobby, again if another corruption case arises.
The FKI was blamed for its suspected role as a middleman in pressuring major businesses to make contributions to two foundations linked to a close confidante of Park at the center of the massive influence-peddling scandal.
Samsung Electronics’ Executive Chairman Lee was convicted of bribery in connection with the scandal and sentenced to 2 1/2 years in prison. He was later released on parole in August 2021 and granted a presidential pardon a year later.
“I personally think the FKI should be given a chance to demonstrate that it has severed its close ties with the government and to reinvent itself as a group that truly represents business interests,” he said.
In early 2017, fifteen Samsung affiliates, led by Samsung Electronics, pulled out of the FKI, in line with Executive Chairman Lee’s pledge to clean up the business after the scandal. The country’s four biggest chaebol have also withdrawn their FKI memberships.
Last week, the FKI announced a series of measures to restore its damaged reputation. Revamping its organization and establishing an ethics committee are among them.
“The world has changed. … Businesses would be under immense pressure if they repeated past malpractices, even after such a large influence-peddling scandal,” he said.
It has become really difficult for Samsung to make “unauthorized” donations, with the committee’s approval process in place, he said, adding that “the committee, in a sense, serves as a shield for Samsung from (political) pressure.”
“I am confident there is very little chance that Samsung would be involved in illegal activities like it was in the past, as long as the committee does its job,” he said.
In 2020, Samsung launched the committee to monitor corporate compliance with laws and ethics, after a court ordered Samsung’s Lee in October 2019 to come up with measures to prevent ethical lapses at the company.
On the need to reform the group’s complicated cross-shareholding structure to loosen family control, the committee chairman said there is no easy fix.
“It is easy to tie a knot. But it is extremely difficult to untie it, when the knot is tied multiple times,” he said. “Given the importance of Samsung in the country’s economy, we should also approach the issue very cautiously.”
The chair also said he personally believes the group should revive the “control tower,” a centralized management structure overseeing Samsung’s sprawling subsidiaries.
Following the scandal, Samsung dismantled the structure, seen as a vehicle for the founding Lee family to consolidate power in the business empire.
“Samsung is not a small yacht. It is a huge aircraft carrier. In terms of efficiency and unity in running the empire, I do think a control tower is necessary,” the chairman said.
“As times change, views on the control tower and the FKI change. While we might sometimes step backwards a little, we can never go back to the past completely.”
jaeyeon.woo@yna.co.kr
(END)