Samsung's New Year's Focus 'Compliance Management'... Compliance Oversight Committee Likely to Appoint President-Level 'Audit Expert'

Audit Expert Considered Within Group
Former Supreme Court Justice Kim Ji-hyung to Announce Formation and Operation Plan on 9th
Legal Community: "To Overcome Samsung's Judicial Risks, Ensuring Compliance Committee Independence and Effective Oversight Are Crucial"

[Image source=Yonhap News]

[Asia Economy Reporters Hyewon Kim and Gimin Lee] The new year's key theme for Samsung Group has emerged as 'compliance management.' Samsung Electronics Vice Chairman Lee Jae-yong visited the Hwaseong plant as his first move of the year, delivering a message on compliance by saying, "Let's boldly discard wrong practices and accidents and pioneer a new future." Following this, the management is focused on forming a Compliance Oversight Committee during the year-end and New Year period. The committee, planned to be composed of executives at the president level, is considering presidents of affiliates known for their auditing expertise as candidates for committee members.

According to industry sources on the 7th, Samsung Group recently recruited former Supreme Court Justice Kim Ji-hyung as the inaugural chairman of the Compliance Oversight Committee and is currently deliberating on appointing president-level members from within the group. It is expected that the Compliance Oversight Committee will consist of six external members, including civic groups, legal professionals, and professors, along with one internal member. A senior Samsung official conveyed, "If a sitting president is appointed as an internal member of the Compliance Oversight Committee, follow-up measures such as some organizational restructuring, including one-point personnel changes, and management innovation plans may be introduced."

Samsung Group's effort to establish the Compliance Oversight Committee and focus on compliance management from the start of the new year is closely related to the orders from the Seoul High Court Criminal Division 1 (Presiding Judge Jung Jun-young), which is hearing Vice Chairman Lee's retrial. At the first trial held in October last year, Judge Jung Jun-young ordered three things: bold innovation, establishment of an effective internal compliance monitoring system to prevent embezzlement and bribery crimes, and rectification of the adverse effects of the conglomerate system. Furthermore, at the third hearing on December 6 last year, the court demanded that the group present a 'response' by the fourth hearing scheduled for the 17th of this month, demonstrating that it would not comply with further bribery demands from political powers. This is why the composition and operation plan of the Compliance Oversight Committee must be finalized no later than before the fourth retrial hearing on the 17th. Former Justice Kim is scheduled to hold a press conference at the law firm Jipyung on the morning of the 9th to specifically disclose the reasons for accepting the chairmanship and the future plans for the committee's composition and operation.

A lawyer from law firm H located in Seocho-dong, Seoul, said, "A person who has worked at Samsung for a long time and is well aware of past management issues, strengths and weaknesses, personnel management, and internal situations that failed to be independent from power, with extensive experience and wisdom, is needed. Someone with expertise in auditing and the ability to communicate effectively between the Compliance Oversight Committee and management within Samsung would be suitable."

Inside and outside the legal community, it is believed that Samsung Group's success in establishing compliance management and escaping the 'judicial risk,' considered the biggest management variable, depends on guaranteeing the independence of the newly established Compliance Oversight Committee and its effective check-and-balance functions. The committee should not merely serve as an advisory body but must have the authority to actually intervene in management decisions that could be interpreted as illegal or unlawful.

Attorney Koo Tae-eon of law firm Lynn advised, "Given that there is already an audit committee with legally defined inherent authority, the newly formed Compliance Oversight Committee appears to be a self-regulatory body. How it will harmonize with the powers of the board of directors and others is important." A former prosecutor turned lawyer commented, "An important factor in sentencing is 'genuine remorse.' Genuine remorse means not temporary reflection but permanent change or the creation of a system. If Samsung shows a properly changed appearance this time, genuine remorse may be recognized and reflected in Vice Chairman Lee's sentencing."

This content was produced with the assistance of AI translation services.