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Chaebol's future relies on transparent governance
Samsung Group Chairman Lee Kun-hee died Sunday at 78. His death came six years and five months after he was hospitalized for a heart attack in May 2014. We extend our sincere condolences to his bereaved family and wish that he rests in peace.
Lee, as chief of the country's largest conglomerate, left a tremendous legacy not only for the national economy, but also our society. He deserves praise for turning Samsung Electronics into the world's top maker of smartphones, memory chips and displays.
The company could not have become a leading global innovator and IT powerhouse had it not been for Lee's aggressive leadership, bold determination and exceptional business acumen. He contributed to increasing the group's assets to more than 400 trillion won ($353 billion) from a mere 8 trillion won in 1987 when he inherited the group from his father, Samsung founder Lee Byung-chull.
He has been widely known for his somewhat radical remarks in Frankfurt, Germany, in 1993. He told his executives, "Change everything but your wife and children." This famous line epitomized his "New Management Initiative" that laid the groundwork for Samsung's ascendance to the global market.
As Samsung said in a statement right after his death, Lee was a true visionary who made a success story for his group and his country. The conglomerate needs to develop his business philosophy further to take a new leap forward in its businesses ranging from electronics, shipbuilding and construction to life insurance, hotels and amusement parks.
Now the attention is focused on how the family-run chaebol can transform its governance structure under Lee's son Jae-yong, vice chairman of Samsung Electronics. Any serious problems are unlikely to take place as the third-generation succession process has long been smoothly underway.
However, no one can categorically rule out the possibility of a dispute erupting over managerial control between the junior Lee and his two sisters ― Boo-jin and Seo-hyun. The deceased chairman holds a 4.18 percent stake in Samsung Electronics and a 20.76 percent in Samsung Life, with his assets estimated at up to 20 trillion won. His offspring should not engage in a bitter inheritance-related feud as is often seen among the heirs of many other family-controlled conglomerates.
Chairman Lee's death has also left challenges for Samsung and his family. Despite his achievements, Lee has been criticized for the group's corrupt ties with political power, his attempts to transfer managerial rights to his son in illegal ways, and his policy of not allowing unions. In 2008, he was convicted of raising slush funds, offering bribes to politicians and evading taxes. He has invited the rage of the public for his emperor-like management style to build a "Samsung Dynasty."
Now, his son Jae-yong is standing trial on charges of offering bribes to impeached and jailed President Park Geun-hye as well as an illicit bid to take over managerial rights through a merger between two Samsung affiliates. The heir should make all-out efforts to adopt a transparent governance structure that holds the key to the group's future.
