Posted on : Jan.10,2020 16:28 KST
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Kim Ji-hyung, a former Supreme Court Justice who has been selected to head the Samsung Group’s “law compliance oversight committee,” talks to reporters regarding his new responsibilities at his office in Seoul on Jan. 9. (Baek So-ah, staff photographer)
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Critics question committee’s power to perform duties under chaebol authority
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Kim Ji-hyung, a former Supreme Court Justice who has been selected to head the Samsung Group’s “law compliance oversight committee,” talks to reporters regarding his new responsibilities at his office in Seoul on Jan. 9. (Baek So-ah, staff photographer)
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The Samsung Group has established a “law compliance oversight committee” centering on outside figures as an independent oversight organization for its group activities. The official launch is to take place sometime in early February. The committee’s role is to consist of independently looking into acts of corruption, bribery, unlawful internal transactions among affiliates and suppression of labor groups, and illegal actions in the succession process for major shareholders.
But some observers are saying the committee will face clear limitations in view of the Samsung Group’s nature, with its authority concentrated chiefly in its owner -- meaning that its “law compliance oversight activities” will only be possible within the scope of what the owner permits.
On Jan. 9, the committee’s chairperson Kim Ji-hyung, a former Supreme Court Justice who is currently a representative attorney for the law firm Jipyong, spoke with reporters at Jipyong’s offices in Seoul’s Seodaemun District.
“I accepted the position of chairperson after being guaranteed independence and autonomy by [Samsung] Vice Chairman Lee Jae-yong. We will be playing the role of guardians for law-abiding and ethical management activity by Samsung,” Kim explained about his vision for forming and operating the committee.
The committee is to consist of seven members, including Kim and five other outside figures -- Civil Society Organizations Network in Korea Co-Representative Kwon Tae-seon, Citizens United for Consumer Sovereignty Secretary-General Ko Gye-hyeon, Seoul National University professor of business Kim Woo-jin, attorney and former Supreme Prosecutor’s Office Assistant Prosecutor General Bong Wook, and Chung-Ang University professor of law Shin In-sook -- along with Samsung Electronics advisor Lee In-yong, who oversees social contribution activities for Samsung Electronics.
The oversight committee’s activities are to be based on data reported through boards of directors and law compliance support personnel already established within the different affiliates. The committee is to receive reports directly in cases of legal violations by upper management. In some cases, it will be conducting its own investigations. When legal violations are found, the committee is to request corrective action and punishment from the affiliate(s) in question, with related content to be published on the committee web page in cases where its requests are not accepted.
Committee has to rely on internal information, has no way of enforcing punishments
Despite the clear drawback of the committee having to depend on internal information received through affiliate boards of directors and law compliance support staff, Kim did not suggest any clear alternatives. When asked by reporters how an outside organization would be able to gain access to sensitive information, he answered only, “I’m asking the same question myself.” Another constraint is that the committee has no means of enforcing any punishments or recommendations it deems appropriate. When asked about the possibility of criminal accusations in cases of violations of the law, Kim said only the response would “differ on a case-by-case basis.”
Some other aspects raise questions about the level of independence. Responding to the observation that Samsung Heavy Industries -- which was hit with a large fine for bribes paid in the US -- was not included among the seven affiliates establishing agreements with the committee, Kim said, “I’m not really clear myself on the circumstances behind the selection of the seven affiliates as companies involved in the agreements.”
Lee Chang-min, a professor of business at Hanyang University, said, “For the oversight committee to function properly, they’re going to need to set up a channel for direct dialogue with Vice Chairman Lee Jae-yong and establish policy measures to protect whistle-blowers.”
“There are inevitably going to be limits on the oversight committee’s activities under the owner-centered structure,” Lee predicted.
The oversight committee’s establishment comes after the first criminal division of Seoul High Court, which is trying Lee Jae-yong’s corruption case, issued an order in an October hearing for Samsung to “establish an effective law compliance oversight system by the time of the next hearing [on Jan. 17].” In a statement, the civic group People's Solidarity for Participatory Democracy stressed that “the oversight committee’s establishment should not serve as a way for Lee Jae-yong to escape punishment for his crimes in connection with influence-peddling.”
“Rather than [establishing] an oversight committee with no legal authority or responsibility, Samsung should first move to improve the independence and transparency of boards of directors as legal institutions that have not been functioning properly so far,” the civic group urged.
By Song Chae Kyung-wha and Shin Da-eun, staff reporters
Please direct comments or questions to [english@hani.co.kr]
