Samsung Group with its de facto head Jay Y. Lee physically detained on criminal charges will temporary come under council management with individual chief executives responsible for their corporate jurisdiction.
It is not the first time the country’s most powerful conglomerate generating annual sales of 300 trillion won ($262 billion) and commanding 500,000 employees across the globe had been without a captain of the ship. The group ran on a council system where CEOs meet regularly to coordinate business affairs briefly in 2008 when both chairman Lee Kun-hee and heir-in-waiting were questioned for creating slush funds and arranging illicit inheritance through issues of convertible bonds in Everland at unfairly cheap prices. Both father and son were convicted but avoided a prison sentence.
But under such group management, Samsung’s uniquely fast and preemptive decision-making cannot be expected.
The Future Strategy Office was reinstated after shutdown following the 2008 scandal to act as a control tower for farsighted investment and strategic plans. But such role can no longer be expected of the Future Strategy Office as the conglomerate promised to dismantle it after it was accused of arranging funds for President Park Geun-hye and her friend Choi Soon-sil.
Moreover, the top officials of the office Vice Chairman Choi Ji-sung and President Chang Choong-ki would be mostly preoccupied with the court trials along with Lee.
A mega-scale investment like the $8 billion buyout of U.S. automotive company Harman International Industries won’t be possible without a commander-in-chief, said a group official declaring to be named.
Lee was unable to fly to the U.S. to argue on behalf of the deal even as some shareholders have been opposing to the transaction. Shareholders vote on the deal Friday.
The group also has been unable to make an annual capital investment and hiring plans for this year due to the management’s distraction with the scandal and judiciary procedures.
Some speculate surface of Lee Boo-jin, the younger sister heading Samsung’s Hotel Shilla, as a temporary replacement for her brother, but group officials struck the option out as her stake-holding does not allow such control over the conglomerate.
Samsung shares mostly fell by the upset at the management. Shares of Samsung Electronics closed Friday 8,000 won down at 1,893,000 won. Samsung C&T shares fell 1.98 percent to 124,000 won and Samsung Life Insurance shares fell 1.4 percent to close the day 106,000 won.
By Song Sung-hoon and Kim Dong-eun
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]