Samsung Group Chairman Lee Kun-hee bows during a press conference at the Samsung Group headquarters in Seoul, Tuesday. Lee said he was stepping down from his post to take responsibility for a scandal.
Lee Kun-hee Apologizes to People, Employees



By Kim Yoo-chul
Staff Reporter

Samsung Group Chairman Lee Kun-hee said Tuesday that he will resign from the conglomerate to take full responsibility for the recent scandal that led him and nine other Samsung executives to be indicted.

``Today, I decided to step down as chairman of the group,’’ the grim-faced Lee said in a nationally televised press conference at the Samsung head office in Seoul.

``I will take all legal and moral responsibility and truly apologize for causing concern,’’ he said, adding that he will embrace all the wrongdoings of the nation’s largest conglomerate.

The announcement came days after a team of special prosecutors led by Cho Joon-woong indicted Lee and nine other executives on charges of tax evasion and breach of trust.

The independent body found that Lee had 4.5 trillion won hidden in bank accounts under other people’s names and charged him with evading 112.8 billion won in taxes. Allegations of bribery and a slush fund creation were not substantiated.

All of the hidden money will be used for ``a charitable purpose,’’ after paying the penalty tax, estimated at 580 billion won, Lee said.

Hong Ra-hee, Chairman Lee’s wife, will also quit her honorary posts linked to the Samsung group, including the Leeum Museum. Lee Soo-bin, chairman of Samsung Life Insurance, will now represent the group as temporary head.

The surprising announcement leaves many key questions unanswered. The chairman has yet to specify whether his only son, Jae-yong, will be his successor, or whether he will rejoin the group after the legal case, or retire completely. His departure does not solve Samsung’s ownership structure. Lee made no mention of ways to improve corporate governance.

He is expected to retain IOC membership.

Samsung Card will sell off its stakes in Everland, which is a de facto holding company for the group.

In 1987, Lee took control of the conglomerate, which has since grown to 59 affiliates, including the world’s biggest memory chip and flat-screen TV maker, Samsung Electronics. Samsung’s affiliates generate combined annual sales of over $150 billion, about 15 percent of the nation’s GDP.

In the press conference, Vice Chairman Lee Hak-soo, chief of the group’s powerful Strategic Planning Office, said the chairman’s only son, will also resign as chief communications officer of Samsung Electronics and work at one of Samsung’s overseas operations.

``More details about Jae-yong’s future work will be unveiled in May, when Samsung conducts a reshuffle of senior executives,’’ he said.

Samsung has already announced the dismantlement of the Strategic Planning Office, a group of some 90 officials who have been accused of helping the chairman manage his hidden assets and transfer control of the group's management to his son.

Vice Chairman Lee said he will retire after ``completing his remaining work,’’ along with President Kim In-joo, who is widely regarded as the No.3 man of the group for day to day operations. In another big shakeup, two heads of the group’s key financial units ― Hwang Tae-seon of Samsung Fire & Marine, and Bae Ho-won from Samsung Securities ― will also step down after being indicted.

Meanwhile, Samsung has made it clear that it will not seek the ownership of a bank, adding that it will study ways of converting the group into a holding company over the long-term. There has been widespread speculation that once the government eases restrictions, major family-run conglomerates would snap up local banks.

yckim@koreatimes.co.kr

Samsung Group Chaimran Lee Kun-hee, standing on a rostrum, and other group executives bow before Lee announces a package of reform plans at the Samsung headquarters in downtown Seoul Tuesday.

Samsung Group Chairman Lee Kun-hee, who was indicted for tax evasion and breach of trust last week, said today he will quit his post at South Korea's largest conglomerate.

"I will step down from the Samsung chairmanship today. I am saddened as there is still much to do, but I will leave with all the faults of the past," Lee said in a brief statement broadcast on national television.

Lee also said the group would dismantle its powerful Strategic Planning Office, which has been criticized for exercising influence across some 60 affiliates, including flagship company Samsung Electronics.

Lee's son Jae-yong will also step down as a chief customer officer of
Samsung Electronics, a group official said.

An independent counsel in January launched a probe into corruption allegations after a former top in-house lawyer at the group said some of its top management hid money and kept a slush fund to bribe politicians, prosecutors and officials.

The prosecutor found no evidence to support the bribery allegation.

If found guilty on the tax evasion charge, Lee could serve from five years to life in jail.

South Korean conglomerates, commonly known as chaebol, powered South Korea from the ashes of the 1950-53 Korean War to become Asia's third-largest economy but have been accused for years of having impenetrable management structures.

Critics say few changes have been made over the years at the family-run business groups, despite a number of high-profile convictions of their leaders. In contrast, pro-business groups have voiced concerns that the probe has delayed important management decisions at Samsung.

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