External experts have been appointed to a new oversight panel to stamp out criminal conduct by South Korea’s Samsung Group even as its corporate leader is set to face a trial in relation a bribery scandal involving former president Park Geun-hye. This was announced by the chief of the committee of the company.
In October last year, the largest conglomerate of South Korea and one of the leading business groups of the world was criticized by a judge overseeing Samsung leader Jay Y Lee’s bribery case, chiding the company for the non-existence of an effective compliance system. The judge has said such a system was necessary to stop any form of wrongdoing by the company’s executives and its leader. The move by the company to set up the oversight panel was a result of that observation by the court.
“The timing Samsung chose to make these changes is not stunningly adequate … and if this committee fails, I will end up with huge disgrace,” said Kim Ji-hyung, a former supreme court judge named to head the compliance and oversight committee, told a news conference.
Worries that his joining the oversight panel at Samsung will only result in him not being able to make any improvements and his appointment will only be used by Samsung for securing favourable court rulings had dissuaded him from turning down the offer from the company initially, he said.
At a meeting, the panel’s autonomy was guaranteed by Lee, Samsung’s de facto leader, he said and had added that the panel will be used for monitoring any possible misconduct at group companies which would also include the flagship Samsung Electronics.
Seven people, mostly outside experts from legal circles and civic groups, will primarily run the new panel, which will begin work in February, even though there is already a compliance program in place at the Samsung Group.
The move was criticized with skepticism by governance experts and who added that the move by Smasung was only aimed at securing a lenient treatment in court. They cited a repetition of criminal offences at Samsung and other family-run conglomerates even though the group had earlier made promises of enhancing the governance and transparency in this regards.
“An effective compliance program could be operated within the environment, encouraging employees to internally report violation without fearing reprisal. But this is not the case at Korean companies,” said Lee Chang-min, a specialist in corporate governance at Seoul-based Hanyang University.
Charges that he had paid a bribe to a friend of the former president Park in order to secure government favour in relation to the succession planning process at the conglomerate have been brought against the 51-year-old Lee.
an appeals court ruling that had given Lee a suspended jail term had been overturned by the Supreme Court in August. This has raised the potential of Lee being handed over a stricter sentence and even possibly a jail term.
Jail sentences over charges of sabotaging union activities and accusations about suspected accounting fraud have already been awarded to executives of Samsung Electronics and biotech affiliate Samsung BioLogics respectively.
(Adapted from BusinessWorld.in)