Mentor of Samsung scion seen stepping up
The arrest of Samsung Group scion Jay Y Lee on bribery charges could hamper decisions on strategic investments and acquisitions at the sprawling conglomerate, insiders and former executives say, even with strong leadership at its many businesses. Although business at flagship Samsung Electronics is humming along, big calls will need to be made and the man most likely to be called upon to make them is Choi Gee-Sung, the top lieutenant at Samsung Group and a mentor to Lee. “Choi is very experienced and has done a good job. He is the one best placed to manage group-level affairs in Lee’s absence,” said one Samsung insider.
While Samsung Electronics is still smarting from the debacle of its exploding Galaxy Note 7 smartphone batteries, its semiconductor business is in rude health. Its share price has risen about 60 per cent in the past year.
But the wide-ranging investigation, part of a corruption scandal that led parliament to impeach South Korean President Park Geun-Hye, has been a major distraction for the country’s largest conglomerate, or chaebol.
“Everything has virtually stopped,” said a second executive at Samsung Group’s powerful strategy office that Choi heads. “We’re mainly focusing on the prosecutor’s investigation (into Lee and Samsung)... We’ll be running an emergency plan and everything will be under Choi’s control for now.”
But some others say even Choi’s role could be limited and Samsung may have to rely more on each affiliate’s top management, with Choi also under investigation by special prosecutors.
“Since we’ve decided to dismantle group strategy office, Choi’s role is likely to gradually decrease, although we can’t say for how much and when,” another Samsung executive said.
A fourth group insider said: “We have a system in place with professional management teams, so in terms of the day-to-day operations things should be fine.”
None of the Samsung individuals wanted to be identified due to the sensitivity of the matter. “It’s not like Samsung businesses will grind to a halt. There are many smart people at the company,” said Kim Yong-Serk, a former Samsung Electronics executive who is now a professor at Sungkyunkwan University.
But the arrest of Lee, 48, will have an impact on longer-term investment decisions at the conglomerate.
“Samsung presidents are evaluated on an annual basis, so they can’t make bold bets about the future. They need a chairman for that,” Kim said. Samsung declined to comment on its management plans or Choi’s role. When Samsung Electronics trailed Nokia in mobile phones — just five years ago — Choi, then CEO, set his sights on a different rival.
“Competition is coming from elsewhere. There’s a company more profitable than us and we should change our target,” he said in January 2012, referring to Apple Inc.