Samsung Vice Chairman Prompted To Apologize, Promises Structural Change

Jay Y. Lee, Samsung Electronics Vice Chairman, has now taken part in a televised announcement to apologize for his part in company controversies and promised a structural change in its management. Mr. Lee reportedly assured viewers that there will “no longer be any controversy” regarding his inheritance of the company. Mr. Lee also promised that “no unlawful actions” will be allowed at the company.

The apology and promises were made with guidance from the company’s external compliance committee. That was formed by Justice Jeong Joon-young, who is currently overseeing Mr. Lee’s retrial.

The Justice formed the committee in order to ensure that Samsung’s compliance system was making “visible efforts” to improve. In particular, the committee intends to prevent bribery scandals, perjury, embezzlement, and further labor union disruptions at the company. A court convicted Mr. Lee of each back in 2017. The crimes were, the courts, determined, part of a plot to ensure his inheritance of the company.

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Why should Samsung apologize and what structural change is being made?

Now, there is a multitude of reasons for the Samsung executive to apologize here. Not least of all, it has long been expected that Mr. Lee would inherit the leadership of the company from his father, Chairman Lee Kun-hee. That’s been a source of controversy at Samsung for years.

That will no longer be the case. Instead, the executive says that control of the company’s management will not be given over to his children at all. The executive additionally apologized for and promised to ban its “no labor union” principles. Instead, Samsung will now ‘nurture a healthy labor union culture’,  Mr. Lee claimed.

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The compliance monitoring committee advising the public apology is led by former Justice Chief Kim Ji-hyung. The former justice advised Mr. Lee back in March to concede and apologize for a number of company actions and policies. That includes its anti-labor union stance but also past criminal activity. Specifically, that’s with regard to an ongoing retrial Mr. Lee is facing on charges of bribery and embezzlement.

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The compliance committee, Mr. Lee indicated, will continue operating well after the retrial mentioned above is brought to a close. And that will remain an independent entity too if the executive is to be believed. Mr. Lee has promised to ensure that compliance becomes a part of company culture.

Is this apology sincere?

The courts released Mr. Lee, pending an appeal, after serving just one year of his five-year sentence. But that ruling has now been overturned — as of August.  In the interim, the public apology is widely considered to be a measured response, at the very least. More vocal criticism has centered on concerns that the statement was only made to gain the favor of the courts.

Whether or not that’s the case will be determined by Samsung’s actions going forward. The company will need to remain in compliance regardless of the outcome in order to avoid more controversy. Right now, Samsung is the number one mobile manufacturer in the world and among the leaders in technology, overall. So Samsung has a lot to lose if it doesn’t comply.

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