Rumours of Samsung reform emerge amid ongoing probe

PHOTO: AFP

Despite facing an ongoing investigation by an independent counsel, Samsung Group and the tech giant's de facto leader Lee Jae-yong seem to be preparing a set of reform plans to appease public anger and tighten the grip on management, according to local reports and market insiders on Thursday.

Earlier this week, Samsung Group officially said that it would disband the group's future strategy office, which has long served as a control tower orchestrating overall business operations of Samsung affiliates.

Local reports were suggesting that along with the disbandment of the decadesold control tower, Samsung could also announce a set of reform plans to seek a turnaround.

Samsung had carried out a similar scenario in 2008, when a set of reform plans were announced in April of that year, right before the prosecution wrapped up a high-profile investigation into Samsung Chairman Lee Kun-hee's slush fund.

This time, the announcement, if made, is likely to be at the end of this month when the independent counsel is set to complete its investigation.

Initiated by Lee Jae-yong, the chairman's only son and the heir apparent, the group could seek a generational shift in management by replacing top executives who climbed the corporate ladder under the wings of Lee's father, according to industry watchers.

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The names being mentioned include the head and the deputy head of Samsung Group's future strategy office, Choi Ji-sung and Chang Choong-ki.

The two are also being implicated in the scandal that they allegedly authorised Samsung's "donation" to Choi Soon-sil, a woman at the centre of the nation's biggest influence-peddling scandal.

The counsel sought to arrest Lee Jae-yong last month on charges of bribery, but failed on the court's rejection.

The special prosecutors have not decided whether to indict Choi and Chang yet.

Rumours are also circulating that the reform measures include Samsung abolishing the open recruitment system and the weekly meeting of Samsung CEOs, and Lee Jae-yong offering 1 trillion won (S$1.3 billion) as a donation to the public.

Lee vowed, during a nationally televised parliamentary hearing in December, that he would spend money "for good use" after discussing the matter with his siblings and mother.

Read Also: Samsung's Lee faces arrest on suspicion of bribery

According to rumours, the reform package could also include ways to give more autonomy to Samsung affiliates so that CEOs could independently run their businesses, and nurture startups to reinforce the tech giant's creativity and openness.

A Samsung Group official said granting more autonomy to Samsung affiliates corresponds to the group's decision to disband the future strategy office.

"Abolishing the future strategy office means that Samsung affiliates will no longer receive directions from the group," said the official.

"But reports on the generation shift, the vice chairman (Lee) donating 1 trillion won and stopping the recruiting of employees on regular bases are not true."

Meanwhile, a reform plan on splitting Samsung Electronics into holding and operating companies, appears unlikely to be discussed during a shareholder meeting scheduled for March.

According to industry insiders, US hedge fund Elliott, which offered the plan to Samsung late last year, didn't submit related documents to raise the issue at the shareholders' meeting.

It had suggested the tech giant split into holding and operating companies, and list the operating unit on the Nasdaq stock exchange.

Elliott, through its affiliates -- Blake Capital and Potter Capital - holds a 0.62 per cent stake in Samsung Electronics. It had strongly opposed the merger between Samsung C&T and Cheil Industries in 2015.

Tens of thousands of South Koreans stage protest in Seoul calling for President Park Geun Hye to resign

  • Tens of thousands of unionized workers staged a general strike and students boycotted classes Wednesday, upping pressure on President Park Geun-hye to resign.
  • Demanding the president's immediate resignation, civic groups, the workers and students vowed to hold a large-scale rally Saturday.
  • An association of 500 civic groups declared Wednesday as "a day of citizens' resistance," staging rallies in front of City Hall in central Seoul and in major cities from 3 p.m. More universities also joined a boycott of classes to ramp up pressure on Park.
  • "Ignoring people's calls for an immediate resignation, Park shifted responsibility (for her resignation) to the parliament," Choi Jong-jin, acting chief of the nation's second-largest umbrella labour union KCTU, said during the rally in central Seoul.
  • Some 220,000 workers from the public transport, public service, construction and education industries under the Korean Confederation of Trade Unions joined the partial strike by taking a day off or leaving work early.
  • Students from 17 universities, including Sookmyung Women's University, Sogang University and Korea University, began to boycott their classes Friday. A few more schools including Seoul National University and Kookmin University joined the boycott Wednesday. Incheon University, Inha University and Pusan National University will join the move from Thursday.
  • Starting at 4 p.m., some 20,000 laborers marched across central Seoul and stopped at the headquarters of major conglomerates including Samsung, SK, Lotte, GS and Hanhwa, which are suspected of contributing money to the K-Sports and Mir foundations set up and run by Park's close confidante Choi Soon-sil.
  • The rally organizers initially planned to march to a fountain only 100 meters away from the presidential office, but the police blocked their plan, citing traffic disruption.
  • The sixth anti-Park rally will be held Saturday at Gwanghwamun Square. As with last Saturday's rally, organizers said some 100,000 participants will completely surround the presidential office from several locations starting from 4 pm.
  • Tens of thousands of South Koreans protested in central Seoul on Saturday (Nov 5) in one the largest demonstrations in the country's capital for years, calling on embattled President Park Geun Hye to resign over a growing influence-peddling scandal.
  • Roughly 43,000 people were at the candle-lit rally early on Saturday (Nov 5) evening, according to police. Organisers said a growing crowd of 100,000 had assembled, making the protest one of the biggest since demonstrations in 2008 against US beef imports.
  • Park Geun Hye has been rocked by a scandal involving an old friend who is alleged to have used her closeness to the president to meddle in state affairs. Ms Park has pledged to cooperate with prosecutors in an investigation.
  • Koreans have been angered by the revelations and say Ms Park, the latest South Korean leader to be embroiled in a scandal involving family or friends, has betrayed public trust and mismanaged her government.
  • Her approval rating has slipped to just 5 per cent according to a Gallup poll released on Friday (Nov 4), the lowest number for a South Korean president since such polling began in 1988.
  • Police said they had deployed 17,600 officers and 220 units including buses and mobile barriers to Saturday's protest. Police in riot gear lined the alleys and streets leading to the presidential Blue House as the main body of the demonstration began the march through central Seoul.
  • Ms Park has sacked many of her immediate advisers over the crisis. A former aide, Jeong Ho Seong, was arrested on Thursday (Nov 3) on suspicion of leaking classified information, a prosecution official told Reuters.
  • No South Korean president has ever failed to finish their five-year term, but Ms Park has faced growing pressure from the public and political opponents to quit.
  • "Even though we're just students, we feel like we can't put up with this unreasonable society anymore so we're participating in this protest with like-minded friends," said Mr Byun Woo Hyuk, an 18-year-old high school student holding a banner calling on the president to resign.

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