Samsung Subcommittee on Compliance "Immediate Withdrawal if Collusion Occurs After Rejoining Federation of Korean Industries" (Comprehensive)

Interim Meeting of Compliance Committee on the Morning of the 18th
Discussion on Samsung's 5 Affiliates Rejoining the Federation of Korean Industries

Immediate Withdrawal Required if Collusion with FKI Occurs
Risk Reduction Recommended as a Compliance Oversight Body

The Samsung Compliance Committee expressed concerns regarding the rejoining of the Federation of Korean Industries (FKI) by Samsung's five affiliates. However, it also recommended that if Samsung does rejoin, mechanisms such as immediate withdrawal in the event of collusion between business and politics should be put in place to reduce compliance violation risks.

The Compliance Committee announced this after holding an extraordinary meeting on the morning of the 18th at the Compliance Committee meeting room in the Samsung Life Seocho building in Seoul.

After the meeting, Lee Chan-hee, Chair of the Compliance Committee, told reporters, "We did not definitively recommend whether to join or not, but first conveyed our concerns," adding, "If the company ultimately decides to rejoin, we recommended under what conditions it should operate."

The Compliance Committee stipulated that if any collusion violations occur after rejoining the FKI, immediate withdrawal is required. Additional conditions were not disclosed, as they could influence the decision-making of the company's board and management.

Chair Lee explained, "We recommended that if collusion acts persist within the FKI, immediate withdrawal should be enforced, along with thorough internal review of measures to ensure operational and accounting transparency before making a decision." In the business community, it is interpreted that conditions such as requiring Compliance Committee approval for FKI membership fees and fund contributions were likely included.

[Image source=Yonhap News]

However, fundamental concerns were expressed about whether the FKI's reform plan can truly break the chain of collusion between business and politics. Chair Lee noted, "The committee reviewed the FKI reform plan several times and deliberated until providing our final opinion, but the current FKI reform plan is merely declarative, and at this point, there are concerns about the likelihood of its realization and the willingness to implement it."

The Compliance Committee held an extraordinary meeting on the 16th to discuss rejoining the FKI but did not reach a conclusion. After further discussions this time, a unanimous decision was made. Chair Lee said, "Because the process to reach unanimity involved intense debates and took considerable time to narrow opinions, the meeting was prolonged."

The background for the Compliance Committee's careful preparation of the recommendation on this day is the FKI's decision scheduled for the 22nd. On that day, the FKI will hold an extraordinary general meeting to approve amendments to its articles of association, including changing its name to the Korea Economic Association (KEA) and merging its affiliated research institute, the Korea Economic Research Institute (KERI), into the KEA. The agenda also includes nominating Ryu Jin, Chairman of Poongsan Group, as the 39th FKI chairman.

Following the Compliance Committee's announcement, Samsung's five affiliates that are members of KERI (Samsung Electronics, Samsung SDI, Samsung Life Insurance, Samsung Fire & Marine Insurance, Samsung Securities) are expected to hold extraordinary board meetings on the 21st and 22nd to discuss the FKI membership agenda. If the four major groups (Samsung, SK, Hyundai Motor, LG), which were KERI members, do not express refusal, their membership will automatically transfer to the KEA. The business community anticipates that the four major groups will proceed with the process of returning to the FKI after six years.

Meanwhile, there is also interest in whether the chairman group will appoint Kim Byung-joon, the current acting chairman of the FKI, as an advisor after the general meeting. The business community believes there is a high possibility that Kim will be appointed as an advisor and that the decision could be made at the meeting on the 22nd. Kim stated in May, "Even after my term ends, I will provide advice and cooperation to ensure reforms are implemented and will play a role if necessary."

On the previous day, EcoPro, a secondary battery company, attracted attention by applying to join the FKI. EcoPro is the second-largest company on KOSDAQ by market capitalization (29.5 trillion won). Its total assets also exceed 5 trillion won, placing it on this year's list of large business groups subject to disclosure by the Fair Trade Commission. POSCO Group is also reportedly preparing to submit an application for membership.

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