Ahead of Lee verdict, Samsung Group lacks leadership ‘Plan B’
SEOUL: Samsung Group, South Korea’s leading conglomerate, has no ‘Plan B’ for taking big decisions if its billionaire de facto leader Jay Y. Lee is jailed for corruption, people familiar with the matter said.
Lee, 49, has been in detention since February, on trial for charges ranging from embezzlement to perjury in a scandal that prompted the ouster of the country’s expresident Park Geun-hye.
He denies wrongdoing, and a lower court will give its verdict on Friday, with prosecutors demanding a 12-year jail term. He would likely appeal any conviction.
Facing a possible leadership vacuum, Samsung Group – whose businesses range from the world’s leading smartphone and chip maker to hotels and insurance – has no plans to set up a leadership committee or a new executive role to drive strategy and take key decisions.
That could be a risk as some of the sprawling conglomerate’s weaker businesses go through a turnaround plan or look for fresh growth drivers.
“There’s no one right now who’ll decide on group-wide issues,” said a person with direct knowledge of the matter, who asked not to be named due to the sensitivity of the issue.
“It’s not impossible to imagine a scenario where a Samsung affiliate gets into trouble and other units become entangled.”
Previously, Samsung would have resorted to its powerful Corporate Strategy Office – dubbed the control tower – that oversaw the group, orchestrated the big decisions on asset sales or arranged support for weakened affiliates. But Samsung disbanded that office in February after it was criticized for its role in the graft scandal.
It also suspended its weekly ‘Wednesday CEO meetings’ of affiliate firms, leaving no centralised coordination. — Reuters
And Choi Gee-sung, Lee’s mentor and head of the control tower, stepped down.
“I think Samsung faces major challenges in efficiently managing the entire group ... it will struggle for a while to re-establish a strategic decision making process,” Kim Sang-jo, South Korea’s new antitrust chief, told Reuters.
In a statement in response to Reuters queries, Samsung said: “The Corporate Strategy Office’s role was to support affiliates and coordinate with them, including mediating overlapping businesses and (their) different interests, but the final business decision was made by each company.”
It noted the group had already announced that management at each affiliate would be led independently by their respective CEOs and boards. While Lee’s detention appears to have had little impact at Samsung Electronics – though its share price has dropped 9 per cent from a record high in the past month – there are signs that future prospects for some businesses are being impacted.
South Korea’s financial regulators this month cited the Lee trial when it delayed a review on Samsung Securities’ request to be allowed to sell short-term investment products – a key plank in the company’s growth plan to expand its investment banking services.
“The current situation is rather disconcerting,” said a spokeswoman for Samsung Securities.
Since group patriarch Lee Kunhee was hospitalised following a heart attack in 2014, his son Jay Y. has led a restructuring – shedding non-core assets, mulling a capital injection for struggling Samsung Engineering, and creating a de facto holding company that tightened his grip. —
It’s not impossible to imagine a scenario where a Samsung affiliate gets into trouble and other units become entangled. Source