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‘Samsung needs control tower’: compliance committee chief

Samsung’s top decision-making body absent since involvement in 2017 influence-peddling scandal

By Jo He-rim

Published : Aug. 27, 2023 - 15:22

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Lee Chan-hee, Chairman of Samsung Group's independent corporate compliance oversight committee, speaks in an interview with a local news agency in Seoul on Aug. 23. (Yonhap) Lee Chan-hee, Chairman of Samsung Group's independent corporate compliance oversight committee, speaks in an interview with a local news agency in Seoul on Aug. 23. (Yonhap)

Samsung Group is a "massive aircraft carrier" and so it needs a control tower for better efficiency and unity, the chief of the tech giant's compliance committee said in an interview with a local news outlet on Aug. 23.

"A small sailing boat does not need a control tower, but Samsung is a giant aircraft carrier. Unless the company’s different divisions completely divide to stand on their own, the lack of a control tower can lead to problems in efficiency and unity,” said Lee Chan-hee, chairman of Samsung Group's independent corporate compliance oversight committee, in the interview with Yonhap. He noted the opinion is his own, completely separate from the company's official position.

“The country’s economy can develop when Samsung is not absorbed in domestic competition, and when it becomes a global corporate (player). For this goal, there needs to be a control tower playing the role of the captain.”

It is not the first time Lee raised the need for a central control tower for Samsung. After a meeting with Samsung Electronics Chairman Lee Jae-yong last October, Lee Chan-hee told reporters that he believes the company needs to revive a central control network.

Samsung had its Corporate Strategy Office, better known as Future Strategy Office, which acted as a control tower until February 2017. Since 1959, the Corporate Strategy Office has played the role of connecting Samsung Group with its many affiliates, including Samsung Electronics, forming a top-down relationship with them for the goal of uniting company strategies.

In 2017, the office was dissolved after it came under fire for its involvement in a massive influence-peddling scandal that led to the impeachment of then-President Park Geun-hye.

Lee Jae-yong, the group’s then-de facto leader, also served a prison sentence for bribery charges. After spending two and a half years in prison, he was released on parole in August 2021 and reinstated to his position after receiving a presidential pardon a year later. The Samsung chief vowed a drastic change in Samsung’s corporate culture, including the establishment of a compliance committee consisting of outside experts.

“Times have changed, and the idea of establishing a control tower should follow. History evolves when you adapt to these changes,” said Lee Chan-hee, the second chief of the committee who took office in January last year.

His comments also came after the committee recently recommended Samsung Group rejoin the Federation of Korean Industry, a business lobby group that remained almost defunct due to its role in the 2017 high-profile corruption scandal.

Following this recommendation, Samsung's key affiliates, including Samsung Electronics, Samsung SDI, Samsung Life, Samsung Fire and Marine Insurance, reentered the FKI, prompting other key chaebol groups to follow suit.

In the interview, the compliance committee chief also stressed that Samsung has a well-established culture for ensuring compliance and ethics in its business activities. While the committee is responsible for the oversight of South Korea's largest conglomerate, it does not stand "above" the conglomerate group, he said.

"The committee is heading for self-obliteration. It will exist until each of the (Samsung's) affiliates can ensure compliance on its own, and we are in that process," Lee said.

He also emphasized that the FKI, which was also blamed for playing an intermediary role in pressing major businesses to pay contributions during the 2017 corruption scandal, should be given a "second chance."

"The FKI should remove any personnel who can raise concerns over certain connections between the companies and the government," Lee said.