Samsung 2nd Compliance Committee Launched... Chairman Lee Chan-hee Emphasizes "Human Rights Priority Management and Governance Improvement"

Three New Recruits Including Kwon Ik-hwan, Former Chief Prosecutor of Seoul Southern District Prosecutors' Office

[Asia Economy Reporters Sunmi Park, Hyeyoung Lee] "We will do our best to deeply root a culture of compliance management within the company."

The Compliance Committee (Compliance Watchdog), an independent body for Samsung's compliance and ethical management set to launch on the 5th of next month, has completed its committee formation and officially begun its second term. The committee plans to focus its work on establishing compliance management that prioritizes human rights and improving corporate governance.

At a press conference held on the same day, Lee Chan-hee, the newly appointed Compliance Committee Chair, stated, "We will select tasks under the principles of human rights-first management, fair and transparent management, and establishing ESG (Environmental, Social, and Governance) management through governance improvement." He emphasized that these are essential issues Samsung must resolve to advance. He added, "We will proceed cautiously from a macro perspective, but regarding specific methods, we will gather advice from external experts and opinions from internal members to propose reasonable solutions." Regarding labor union issues, he said, "We will ensure that no human rights violations occur during the process of abandoning no-union management."

Following the achievements of the first term, which included a public apology to the public, the abolition of no-union management, and the abandonment of fourth-generation succession, the second term launching next month is expected to lead major tasks such as preparing Samsung Group’s governance improvement plans and reorganizing the group-level control tower, focusing on further enhancing corporate transparency.

Samsung’s Compliance Committee was established in February 2020 following the appellate retrial court’s order for Vice Chairman Lee Jae-yong to establish an internal compliance monitoring system amid the ‘National Pension Service Scandal’ case. The Compliance Committee operates as an independent organization that is not subject to Samsung’s instructions in appearance. Seven major affiliates, including Samsung Electronics, Samsung C&T, Samsung SDI, Samsung Electro-Mechanics, Samsung SDS, Samsung Life Insurance, and Samsung Fire & Marine Insurance, participate as signatories and are monitored by the Compliance Committee.

Improving corporate governance is cited as an immediate task. Three months after the Compliance Committee’s launch, Vice Chairman Lee declared the abandonment of fourth-generation succession, which has consistently raised calls for Samsung to reform its governance structure to include a collective governance system led by professional managers rather than an owner-centered system. The new Compliance Committee, led by Chair Lee, plans to begin analyzing the results of ongoing consulting on governance improvement conducted by Boston Consulting Group (BCG) as soon as they are available. Based on the consulting results, outlining specific plans for Samsung’s governance reform and preparing detailed measures are considered the main tasks of the second term.

How much the second term Compliance Committee can overcome limitations regarding autonomy and independence remains a challenge. The committee’s duties and authority are fundamentally governed by agreements made by the boards of Samsung affiliates participating in the committee. Since the affiliate boards effectively determine everything from the committee’s establishment to its growth, development, dissolution, and even its duties, authority, and budget, concerns have been raised that the committee’s autonomy and independence could be compromised depending on the will of the group’s head. Chair Lee promised, "We will protect the committee’s independence and autonomy without wavering under any pressure."

Meanwhile, the second term Compliance Committee has newly recruited Kwon Ik-hwan, former head of the Seoul Southern District Prosecutors’ Office, Professor Hong Eun-joo of Hanyang Cyber University, and Yoon Sung-hye, former chief of the Hanam Police Station in Gyeonggi Province. Along with three existing members?Sung In-hee, Won Sook-yeon, and Kim Woo-jin?the committee will operate with one chair and six members and will begin full activities after the final approval process by the participating companies.

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