Word: samsung
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Dates: during 2000-2009
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...large, these titans of industry, though often distrusted, are lauded as the men who transformed an impoverished backwater into a modern nation with the world's 13th largest economy. This week, however, one of the most powerful fell from his pedestal. Lee Kun Hee, 66, the chairman of Samsung Electronics, shocked South Korea by resigning after being indicted for tax evasion and breach of trust...
...Samsung's bewildering management structure and its political influence have been common features of Korea's family-run business conglomerates, called chaebols. Over the past decade, several of the sprawling business empires have come under fire from minority shareholders, foreign investors and government prosecutors for dubious practices, forcing many chaebols to become more transparent. The family that controls the LG group of companies set up a holding company to clarify their shareholdings. Samsung has improved its corporate governance by, for example, allowing more independent directors, but the presence of Lee remained a question mark over its progress. Some...
According to Seoul analysts, Lee's departure may clear the way for a round of corporate reform within the Samsung conglomerate and possibly throughout corporate South Korea. Without Lee as an overarching force, executives of individual Samsung companies will gain more influence over their own operations. There is a persistent fear among investors that Samsung managers were more loyal to Lee than to shareholders...
...Samsung also announced that it will abolish its Strategic Planning Office, which coordinated among the many Samsung affiliates. The company is "moving to the separation of ownership and management," says Thae Khwarg, CEO of fund manager SEI Asset Korea in Seoul. Lee's departure "will make managers more conscious that they have a duty to their shareholders." And with Samsung taking the lead, other chaebols may be forced to follow suit. "Samsung has set many standards," says Yoo Jung Sang, a managing director at Good Morning Shinhan Securities in Seoul. "There should be a spill-over effect to the conglomerates...
...resignation throws into question the future of the powerful Lee business clan. As a shareholder in Samsung affiliates, Lee holds the loyalty of many Samsung executives, and he is unlikely to vanish from the scene. He was widely expected to attempt to pass control of Samsung to his son, Lee Jae Yong. But that is looking increasingly difficult. The younger Lee resigned from his position as Samsung Electronics' chief customer officer though he will be given a new, yet-to-be-defined role in developing overseas business...