Samsung Will Take the Right Path... Strengthening Compliance and Responsible Management

Meeting of CEOs from 7 Samsung Electronics Affiliates
First Gathering After Vice Chairman Lee Jae-yong's Reimprisonment
Exploring Concrete Measures for Social Responsibility

Officials are entering and exiting the Samsung headquarters in Seocho-gu. On this day, a meeting was held at the Samsung headquarters between the CEOs and top executives of the seven partner companies of the Samsung Compliance Monitoring Committee.
[Image source=Yonhap News]

[Asia Economy Reporters Heungsun Kim and Hyunjin Jung] At 10 a.m. on the 26th, representatives of seven Samsung affiliates including Samsung Electronics, Samsung Electro-Mechanics, Samsung SDI, Samsung SDS, Samsung Life Insurance, Samsung Fire & Marine Insurance, and Samsung C&T gathered at Samsung Electronics' Seocho building in Seoul. Vice Chairman Kim Ki-nam of Samsung Electronics, President Choi Yoon-ho of the Management Support Office, President Kyung Kye-hyun of Samsung Electro-Mechanics, President Jeon Young-hyun of Samsung SDI, President Hwang Sung-woo of Samsung SDS, President Jeon Young-mook of Samsung Life Insurance, President Choi Young-moo of Samsung Fire & Marine Insurance, and President Ko Jung-seok of Samsung C&T were all present.

This was the first time since Vice Chairman Lee Jae-yong of Samsung Electronics was re-incarcerated that the affiliate representatives gathered in one place. The meeting was arranged with the purpose of seeking concrete measures for the Samsung Compliance Committee (Compliance Committee) and the CEOs of the seven Samsung affiliates to fulfill their responsibilities and roles in Samsung's compliance management.

Kim Ji-hyung, chairman of the Samsung Compliance Committee, stated, "We intend to have open and extensive discussions (without special restrictions)." However, the expressions of the representatives heading to the meeting room were somber, seemingly aware of the management vacuum caused by the absence of the group head and the media's attention. Vice Chairman Kim Ki-nam and Presidents Kim Hyun-suk and Ko Dong-jin of Samsung Electronics posted a message from Lee, delivered through his lawyer, on the company intranet that morning. In the message to employees, Lee emphasized, "Regardless of my situation, Samsung must continue on its path," and "We must keep the promises already made to the public."

Kim Ji-hyung, Chairman of Samsung Compliance Monitoring Committee, is attending a meeting between the CEOs and top executives of seven partner companies of Samsung Compliance Monitoring Committee held at the Samsung headquarters in Seocho-gu, Seoul on the 26th, and responding to questions from the press.
[Photo by Yonhap News]

Samsung CEOs Gather for the First Time in 7 Months

The message Lee conveyed ahead of the CEO meeting consisted of three main points: to remain united without wavering, to focus on the company's core duties of investment and job creation, and to transform Samsung into a company that fulfills its social responsibilities. This was his second message following his request through his lawyer on the 21st for the Compliance Committee to continue fulfilling its fundamental role.

Accordingly, the roles and responsibilities of the CEOs are expected to be further strengthened. It is reported that the meeting involved in-depth discussions on the role of top management in establishing a compliance culture within Samsung affiliates. A Samsung official explained, "During the retrial process, there was criticism that the Compliance Committee's activities lacked effectiveness due to the absence of top management participation. Therefore, the Compliance Committee decided it would be better to communicate with more responsible individuals, leading to this discussion with the presidents."

Although limited to some affiliates, this was the first time in about seven months that Samsung CEOs gathered in an official setting. Previously, on June 1 of last year, about 20 affiliate presidents attended a lecture on healthy labor-management relations by Moon Sung-hyun, chairman of the Economic, Social and Labor Council (ESLC), held at the Samsung Human Resources Development Center in Yongin, Gyeonggi Province. That special lecture was part of efforts to practice one of the three agendas set by the Compliance Committee?management succession, labor, and communication with civil society?specifically focusing on forming a future-oriented labor-management relationship at Samsung.

A Samsung official said, "The Compliance Committee was launched focusing on seven major affiliates with the intention to faithfully implement the set agendas for compliance management, increase focus, and reduce trial and error," adding, "In the future, the scope of participation will be expanded to ensure that a common compliance culture is established across all affiliates."

Strengthening Responsible Management Expected

As Vice Chairman Lee urged faithful investment and job creation and continued corporate social responsibility, the pace of CEO-centered responsible management is expected to accelerate. Samsung Electronics faces pressing issues such as the investment decision for the P3 line in Pyeongtaek, expected to exceed 30 trillion won, and the expansion of the semiconductor plant in Austin, USA.

Internally, it is anticipated that major business issues will be coordinated within the existing task force (TF) framework. After disbanding the Future Strategy Office in February 2017, Samsung Group formed TFs by three major sectors: electronics, non-electronics, and finance. These include the Samsung Electronics Business Support TF responsible for electronics affiliates and business coordination, the Samsung C&T EPC Competitiveness Enhancement TF handling financial improvements and business coordination such as capital increase for Samsung Heavy Industries, and the Samsung Life Financial Competitiveness Enhancement TF responsible for capital expansion and improving governance such as circular shareholding.

A Samsung official said, "While autonomous and responsible management is conducted centered on each affiliate's representative, hiring systems, investment coordination, and cooperation with related companies have continued through the Business Support TF," and added, "In the absence of the group head, management will return to an autonomous system by affiliate." Additionally, the Compliance Committee plans to commission the Boston Consulting Group (BCG) to conduct governance-related research to redefine the role of the Business Support TF, including categorizing illegal activities within Samsung affiliates.

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