Samsung Compliance Committee Recommends Lee Jae-yong Apologize for Succession of Management Rights... Samsung "Will Faithfully Review" (Comprehensive)

"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"

[Asia Economy Reporter Ki-min Lee] The Samsung Compliance Committee has recommended that Vice Chairman Lee Jae-yong of Samsung Electronics reflect on and apologize for the succession of management rights. It also advised that Vice Chairman Lee personally declare that Samsung’s no-union management policy will no longer exist. In response, Samsung stated that it will thoroughly review the Compliance Committee’s recommendations.

On the 11th, the Compliance Committee sent recommendation letters related to ▲labor unions ▲management succession ▲communication with civil society to Vice Chairman Lee and seven affiliated companies including Samsung Electronics, Samsung Electro-Mechanics, Samsung SDI, Samsung SDS, Samsung C&T, Samsung Life Insurance, and Samsung Fire & Marine Insurance, requesting them to state their positions within 30 days.

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

Regarding the agenda of ‘management succession,’ the Compliance Committee viewed that most of Samsung Group’s past controversies were generally related to ‘succession.’ Therefore, it 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 public that no violations of compliance obligations will occur in the future regarding the exercise and succession of management rights.”

It further requested that “affiliated companies respect the interests of ordinary shareholders equally with those of controlling shareholders and ensure that the interests of the remaining shareholders are not infringed upon for the benefit of some controlling shareholders.”

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 the Samsung Life Seocho Tower in Seocho-gu, Seoul. The Samsung Compliance Committee is an external independent 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@

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 of its labor union-related recommendations by stating, “It is necessary to shift the mindset to see that both labor and management complying with labor laws and harmonizing and coexisting will help sustainable corporate management, and that free union activities can, from a macro perspective, actually create corporate value.”

As a measure, the committee recommended, “Reflect on and apologize for the failure to properly manage the risk of labor-related compliance violations, including multiple violations of labor laws at Samsung affiliates,” and “promise to create measures to prevent recurrence of labor-related compliance violation risks through sufficient communication between labor and management.” It also explained that it proposed as a recommendation that Vice Chairman Lee personally 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 affiliated companies prepare and publicly announce concrete action plans to restore trust with civil society.

The committee requested that Vice Chairman Lee and all affiliates prepare and announce measures to dispel controversies related to his bribery trial and to faithfully fulfill the committee’s original mission and duties. The Compliance Committee described this recommendation as “the outcome of the committee’s commitment to focus on its role as a watchdog for Samsung’s ethical compliance management based on independence and autonomy, to operate the compliance monitoring program comprehensively and effectively, and to leave no area of compliance monitoring untouched,” adding, “We hope this recommendation will resonate widely in our society as the beginning of a new chapter in Samsung’s history amid change.”

Samsung has begun an internal review upon receiving the Compliance Committee’s recommendations. A Samsung official responded, “Samsung will thoroughly review the Compliance Committee’s recommendations.”

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