Samsung Compliance Committee's First Regular Meeting After '1st Anniversary' Launch... Discussing Risk Typology Service and More

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[Asia Economy Reporter Jeong Hyunjin] The Compliance Committee, an independent external compliance management oversight body for Samsung, marked its first anniversary by discussing measures to enhance its effectiveness. Established in February last year during the trial of Samsung Electronics Vice Chairman Lee Jae-yong over the state affairs manipulation scandal, the Compliance Committee has achieved meaningful outcomes over the past year, including Vice Chairman Lee's public apology and the allowance of labor union activities. However, it was recently evaluated by the judiciary as falling short of effectiveness standards.

On the morning of the 16th, the Compliance Committee held a regular meeting at Samsung Electronics’ Seocho building in Seoul. This meeting was the first regular session held after the official first anniversary on the 3rd of this month. Chaired by former Supreme Court Justice Kim Ji-hyung, the Compliance Committee has held monthly regular meetings since its inaugural session on February 5 last year, continuously monitoring external sponsorship expenditures, internal transactions, deals, and mergers.

Over the past year, the Compliance Committee has strengthened its monitoring and control functions to ensure Samsung’s compliance management. It acknowledged past violations of compliance obligations during the succession process of the group’s management by the founding family and demanded a public apology to the people. It also called for the abandonment of no-union management and the establishment of measures to restore trust with civil society. In response, Vice Chairman Lee issued a public apology in May last year, and seven Samsung affiliates signed a joint agreement to strengthen compliance management and permit labor union activities.

Despite these efforts, the retrial court last month pointed out the Compliance Committee’s lack of effectiveness, resulting in Vice Chairman Lee receiving a prison sentence of two years and six months and being re-incarcerated. Four days after his detention, on the 21st of last month, Vice Chairman Lee requested the Compliance Committee to "fulfill its fundamental role," and the Committee responded by stating, "We will prove our effectiveness solely through results. Regardless of the court’s ruling, we will continue to do our work."

During the meeting, the Compliance Committee reviewed its performance over the past year and discussed measures to enhance effectiveness through this year’s operational tasks and plans. Additionally, to proactively address new types of compliance violations that may arise in the future, the Committee decided to accelerate the commissioning of external research to categorize compliance violation risk types among top executives and to establish evaluation indicators and inspection items related to these risks.

Although not officially on the agenda, discussions were also reported to have taken place regarding strengthening compliance oversight of the 'Business Support Task Force (TF),' which has served as Samsung Group’s control tower. Given criticisms during Vice Chairman Lee’s trial about insufficient oversight of the control tower, improvements in this area are expected.

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