[Desk Column] Lee Jae-yong's Apology, Lee Jae-yong's New Samsung

[Asia Economy Reporter Eunjeong Lee] "I do not intend to pass on the company’s management rights to my children."

The 'Korean-style owner management' has reached a critical turning point. At the center stands Samsung Electronics Vice Chairman Lee Jae-yong. Vice Chairman Lee apologized for controversies surrounding Samsung, including succession of management rights and labor union issues, and declared the end of Samsung’s hereditary management that has continued for three generations?from the founder, the late Chairman Lee Byung-chul, to his father Chairman Lee Kun-hee, and now himself. This is an unfamiliar path that Korean business circles have never taken before. Since this groundbreaking statement by Vice Chairman Lee, Samsung has been exploring ways to transition to a collective governance structure that separates ownership and management, similar to the Wallenberg family in Sweden. The Wallenberg family jointly owns over 100 affiliates through a foundation but entrusts the management of these affiliates to professional managers. Despite maintaining family management for five generations over 160 years since founding Stockholm Enskilda Bank (SEB) in 1856, this is the secret to being praised as one of Sweden’s top companies. Vice Chairman Lee, who declared he would not pass on management rights, is presumed to have drawn the blueprint for the 'New Samsung' governance structure by emulating the Wallenberg family’s approach.

However, many still do not trust Lee Jae-yong’s New Samsung. There are frequent criticisms that the apology itself is a cunning move aimed at reducing his sentence in the retrial. Samsung may feel these views are unfair, but it is a case of reaping what it has sown. The apology was made in response to the request of the Samsung Compliance Committee (Compliance Committee), which was established following the court’s recommendation.

Still, there are aspects to consider objectively. If Vice Chairman Lee had not apologized, would he have escaped criticism for using a trick to lower his sentence? I believe not. Since Samsung would have rejected the Compliance Committee’s recommendation, it would have been clear that Samsung regarded the committee as a mere formal tool for judicial judgment, inviting cynicism. What if he had disclosed detailed governance improvement plans through the apology? That too would have been difficult to receive positively, as it could be interpreted as blatant courting of the court.

This apology is more meaningful as a vision proposal responding to the era’s demand for enhanced transparency and social responsibility of large corporations and major shareholders, rather than merely a response to the Compliance Committee’s recommendation. When the Compliance Committee announced its apology recommendation last month, few expected Vice Chairman Lee to hold a press conference in person. Previously, when Samsung Electronics Chairman Lee Sang-hoon and Vice President Kang Kyung-hoon were indicted for union disruption at Samsung Electronics Service and subsequently detained, Samsung issued a brief statement under the names of Samsung Electronics and Samsung C&T. Many expected a similar form of apology this time. Nevertheless, Vice Chairman Lee appeared in person, read the public apology he wrote himself, and bowed deeply three times. He clearly drew a line regarding the possible fourth-generation succession issue and emphasized his commitment to building a Samsung befitting the nation’s dignity. This is an expression of his will to elevate Samsung’s governance to the highest level tailored to Samsung’s unique 'super-gap' strategy, aiming for a leap to a higher dimension. This aligns with the societal demands of our time for Samsung.

Samsung’s warm-up for governance change is over. What remains now is fulfilling the promise. Just as it boldly decided to end Korean-style owner management, it is hoped that Samsung will complete its unique new governance structure based on strong execution power. "I absolutely do not see Samsung Group’s declaration on the 6th as a shallow deception to evade judicial responsibility. I hope it will be recorded as a monumental turning point for South Korea’s economy moving into a new era," said Lee In-young, former floor leader of the Democratic Party of Korea, at a policy coordination meeting held just before his term ended on the 7th.

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