Samsung announces major management revamp
26 June 2008
After the tax evasion and breach of trust scandal that led to its boss Lee Kun-Hee stepping down, South Korean biggest conglomerate Samsung yesterday announced management changes to bring in greater transparency and the dismantling of its once powerful strategic planning office.
Instead Samsung Electronics vice chairman Lee Yoon-Woo will head a seven-member committee to decide new projects and coordinate investment by subsidiaries, while another six-member committee led by Lee Soon-Dong, president of the roup's advertising arm Cheil Worldwide will be in charge image building.
Lee Hak-soo, who headed the strategic planning office, will be named an advisor for Samsung Electronics. The group will also introduce regular meetings of chiefs from its affiliates to discuss key issues and oversee investment deals and brand management.
The charge against Lee follows a three-month investigation into allegations of corruption and using illegal accounting techniques to transfer control of the business to his son. Though the investigations cleared the firm of a former executive's allegations that Samsung had used a multi-million dollar slush fund to bribe prosecutors and judges, prosecutors had indicted him with tax evasion last Thursday.
The breach of trust charge concerns the transfer of management control to his 39-year-old son Lee Jae-Yong through a convertible bond issue. Lee, currently facing trial had headed the group for two decades.
The electronics and semiconductors maker is one of South Korea's most powerful and respected organisations with annual profits of over $12.9 billion. Through its 59 operations, Samsung's influence stretched into nearly every aspect of Korean industry, from property and mobile phones to flat screen televisions and hospitals.
The group accounts for as much as a fifth of South Korea's exports, 18 per cent of its gross domestic product and 20 per cent of the market capitalisation of the Seoul exchange's benchmark Kospi Index.