Samsung Compliance Monitoring Committee: "Vice Chairman Lee Jae-yong, Apologize for Violating Compliance Obligations in Succession of Management Rights"

"Please publicly announce that there will be no violations of compliance obligations regarding future management rights exercise and succession"
"Vice Chairman Lee Jae-yong should declare that the no-union management policy will no longer exist"

Kim Ji-hyung, Chairman of the Samsung Compliance Committee, is presiding over the '1st Meeting of the Samsung Compliance Committee' held on the 5th at Samsung Life Seocho Tower in Seocho-gu, Seoul. The Samsung Compliance Committee is an independent external organization established to eradicate illegal activities by executives and employees, including CEOs of major Samsung affiliates, and to strengthen compliance management. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Ki-min Lee] The Samsung Compliance Committee has recommended that Samsung Electronics Vice Chairman Lee Jae-yong reflect on and apologize for issues related to the succession of management rights.

The Compliance Committee sent recommendation letters regarding ▲labor unions ▲management succession ▲communication with civil society to Vice Chairman Lee and seven Samsung affiliates: Samsung Electronics, Samsung Electro-Mechanics, Samsung SDI, Samsung SDS, Samsung C&T, Samsung Life Insurance, and Samsung Fire & Marine Insurance. The committee requested a response to the recommendations within 30 days.

The Compliance Committee explained that since its inception, it has engaged in lengthy discussions on the top compliance issues required of Samsung’s top management and issued recommendations containing opinions on necessary improvements for each agenda item. The committee had previously decided to make these recommendations at its third meeting held on the 5th of this month.

Regarding the agenda on ‘management succession,’ the Compliance Committee viewed that most of Samsung Group’s past controversies were related to succession. The committee recommended, “Vice Chairman Lee, as the head of the group, should reflect on and apologize for the violations of compliance obligations that occurred during the succession process of the group’s management rights, and publicly declare to the people that no violations of compliance obligations will occur in the future regarding the exercise and succession of management rights.” It further requested that “the affiliates respect the interests of ordinary shareholders equally with those of controlling shareholders and ensure that the interests of other shareholders are not infringed upon for the benefit of some controlling shareholders.”

The Compliance Committee also recognized that “violations of labor-related compliance obligations could cause significant damage to Samsung’s corporate value,” and explained the background for the labor union-related recommendations by stating, “It is necessary to shift the mindset to understand that both labor and management complying with labor laws and harmoniously coexisting contributes to sustainable corporate management, and that free union activities can, from a macro perspective, actually create corporate value.”

As measures regarding this, the committee stated, “Reflect on and apologize for the failure to properly manage the risks of labor-related compliance violations, including repeated violations of labor laws at Samsung affiliates,” and recommended, “Promise to develop measures to prevent recurrence of labor-related compliance violation risks through sufficient communication between labor and management.” It also explained, “The committee proposed that Vice Chairman Lee, as the head of the group, directly declare that the no-union management policy will no longer exist at Samsung Group workplaces.”

Furthermore, the Compliance Committee noted that Samsung has lacked communication with civil society and failed to build trust, and recommended that Vice Chairman Lee and all affiliates prepare and publicly announce concrete action plans to restore trust with civil society.

The committee requested that Vice Chairman Lee and the affiliates take measures and publicly announce them to dispel controversies related to Lee’s bribery trial and to faithfully fulfill the committee’s original mission and duties. Regarding this recommendation, the Compliance Committee stated, “This is the result of a committee committed to focusing on its role as a watchdog for Samsung’s ethical compliance management based on independence and autonomy, ensuring that the compliance monitoring program operates comprehensively and effectively, and pledging not to place any sacred cows in the field of compliance monitoring.” It added, “We hope that this recommendation from the Compliance Committee will resonate widely in our society as a signal that a new chapter in Samsung’s history is beginning amid change.”

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