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Samsung Electronics office building in Seocho-gu, Seoul. Yunhap news
Samsung’s internal anxiety is growing as the former prosecutor’s office prosecuted 11 former and current executives and employees, including Samsung Electronics Vice President Lee Jae-yong, for the alleged succession of management rights. This is because, as uncertainties increased due to variables such as the new coronavirus infection (Corona 19) and the trade conflict between the US and China, the bad news of judicial risk was added. There is also concern that large-scale mergers and acquisitions (M&A) and large investments will decline.
I was waiting … Samsung disappointed
On this day, Samsung was engulfed in a cold atmosphere, saying that the prosecution’s policy of prosecution without disparaging, “expectations have collapsed.” This is because the “judicial risk” that started with Gukjeong Nongdan has not been resolved, but has moved into a protracted phase. In February 2017, Vice President Lee was sentenced to prison in connection with the Gukjeong Nongdan case and sentenced to prison (5 years in prison) at the first trial, and was released on probation at the appeal trial. However, in August last year, the Supreme Court reversed the appeal court and the trial is underway. Within Samsung, pessimism prevailed that prosecution is difficult to avoid, but there was also some expectation that there might be a delay in parole even if it was not an indictment. However, when the prosecution decided to prosecute, the expectation of “just in case” disappeared.
Lee Bok-hyun, head of the Seoul Central District Prosecutor’s Office, announced the results of the investigation of the Samsung Group’s illegal merger and accounting corruption case in the press room of the Seoul Superior Prosecutor’s Office on the afternoon of the 1st. Yunhap news
The main reason Samsung is concerned is Lee’s management gap. This is because even if Vice President Lee is tried in a disabled state, business disruption is inevitable. In fact, Vice President Lee had no time to devote himself to the company after Gukjeong Nongdan. He had to go through 10 subpoena investigations and 3 substantive examinations for arrest warrants. After special processing, he attended Gukjeong Nongdan’s trial more than 70 times. Not only President Lee, but also executives and staff members had to be called for trial and investigation from time to time. A Samsung official said: “For the past four and a half years, due to the investigation, normal management has been impossible.”
Owner’s decision required investment-M&A, can be stopped
There are also concerns that Lee’s failure to focus on running the company will lead to a large-scale investment contraction. In fact, after acquiring Harman, the world’s number one electronics company in November 2016, for 9 trillion won, the largest M&A record in history, there is no M&A activity to date. All the bold investment plans, such as the ‘180 trillion won investment and employment plan’ and the ‘Semiconductor Vision 2030’ with an investment of 133 trillion won, were announced after Lee was paroled.
Samsung Electronics advisor Kwon Oh-hyun said in an interview with an internal broadcast last month: “Due to the nature of the semiconductor industry, we have to make decisions quickly and instantly, and in this case, we need strong leadership. ” He pointed out the importance of the investment: In fact, TSMC, Taiwan’s number one foundry (consignment production of semiconductors), announced that it will invest 22 trillion won last week to produce 2-nano semiconductors before Samsung.
Samsung Electronics Vice President Lee Jae-yong visited the Onyang plant in Chungnam in July to review the development strategy for next-generation semiconductor packaging technology. News 1
Close collaboration with other companies also becomes difficult. Vice President Lee met with Hyundai Motor Group Senior Vice President Eui-sun Eui-sun in May to discuss next-generation electric vehicle battery cooperation. Lee Kyung-mook, professor of business administration at Seoul National University, said: “Regarding mergers and acquisitions and investment, the owner met with outside experts and made the decision to address it directly, but the judicial risk protracted made it impossible to do so. It could be a lot of money, but it could be a big problem for Samsung in five or ten years.
Reporter Jang Joo-young [email protected]
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