Samsung Group is looking to reform itself following a corruption, influence-peddling scandal that’s been shaking the entire South Korea since last fall. The largest business conglomerate in the Far Eastern country is thus looking to disassemble itself for the first time in its 58-year-long history, the company said earlier this week and surprised many industry watchers. The Seoul-based tech giant is planning to reform its corporate structure with the goal of dealing with the controversies pertaining to the connections between its business and political elites in South Korea, as well illegal acts that its Vice Chairman and heir Jay Y. Lee was recently accused of.
Samsung Group will hence shut down its Future Strategy Office, a branch of the company that was previously dubbed “the control tower” of the conglomerate. The company will also abolish its presidential board which was so far tasked with managing its subsidiaries. This new, decentralized version of Samsung will be hoping that its subsidiaries and their board of directors will be able to make their own business decisions. The company’s presidential board and its Future Strategy Office allegedly played a role in the corruption scandal that saw Lee end up in jail, awaiting trial on charges of bribery, embezzlement, perjury, hiding the proceeds of a criminal act, and concealing assets overseas.
Lee already vowed to shut down the Future Strategy Office in December, before the full extent of the influence-peddling scandal that Samsung got involved in was clear. The body was never officially registered as a corporation but was directly controlling the boards of directors of Samsung Group’s subsidiaries. While the office allowed Samsung to grow in a rapid and consistent manner due to defining and executing standardized business strategies, it was also criticized for preventing the conglomerate’s subsidiaries to act transparently. Samsung’s executives are interpreting the latest turn of developments as an attempt to transform Samsung into a company with a horizontal organization structure whose subsidiaries are relatively autonomous and free to act as they will. This is yet another corporate change Samsung seemingly made in response to Lee’s recent arrest and the scandal that preceded it. Last week, the Seoul-based conglomerate also changed its donation policies which Lee allegedly used to pay for the aforementioned bribes.