Samsung should have transparent governance
Samsung Electronics Vice Chairman Lee Jae-yong was put behind bars again Monday immediately after he was sentenced to two-and-a-half years in prison for bribery and embezzlement in connection with a corruption scandal that led to the ouster of former President Park Geun-hye. The sentence is a reminder that no one is above the law. It also sent a clear message that conglomerates and their owners should break their corrupt ties with the political elite and promote transparency and accountability.
The Seoul High Court found Lee guilty of bribing Park and her longtime confidant Choi Soon-sil in return for government support for a smooth father-to-son transfer of managerial rights at Samsung Group, the country's largest conglomerate. The ruling came in a re-hearing of evidence after the Supreme Court overturned the appeals court's sentencing of Lee to a suspended jail term, concluding that Lee had offered 8.6 billion won ($7.8 million) in bribes.
In 2017, a Seoul district court gave Lee a five-year jail term for providing 8.9 billion won in support for Choi's daughter's equestrian training and a donation to a sports foundation run by her family. Lee, the de facto leader of Samsung, was freed in 2018 after the appeals court viewed only 3.6 billion won of the money given as bribes and sentenced him to a 30-month suspended prison term. But the top court found that the amount totaled 8.6 billion won, ordering a review at the lower court.
The key point is that Lee “actively” offered bribes to the former president to solicit her support for a 2015 merger between two Samsung affiliates ― Samsung C&T and Cheil Industries ― a deal aimed at solidifying his control over the conglomerate. The merger was found to have facilitated Lee's succession from his ailing father who died last October. The court rejected Lee's claim that he was forced to provide the money as a victim of presidential power abuse.
Lee and Samsung should accept the ruling humbly. The case must serve as an opportunity to cut the shady connections between family-run conglomerates and the political power. Like other business concerns, Samsung has had a bad track record of creating slush funds, offering illegal campaign funds to politicians, embezzling company funds and evading taxes. Its owners have also invited criticism for behaving like emperors and dreaming of creating a corporate empire.
Now is the time to end such illegal acts and unfair business practices. For this, Samsung should double down on firmly putting a transparent governance structure in place. Samsung Electronics has already emerged as one of the world's top makers of smartphones and memory chips. If it sticks to old ways, it cannot survive the intensifying global competition. The company and its executives should faithfully comply with the law, ethics and global standards to keep its lead in the IT industry. Ultimately, the court ruling should prompt chaebol reform to create a new corporate culture and promote fair competition.