Update:Or does he? I have been admittedly turned a rather jaded eye to the whole Samsung thing, half expecting Lee to play the “Hospital Card”. Something caught my eye.
Who will control Samsung now? The literal heir apparent is Lee Jae-yong, Kun-Hee’s son who has been groomed for quite a while. However, the terms under which ownership was transferred to Jae-yong is part of the case against Lee. I find it a bit convenient that Lee was indicted and resigned, yet the fair haired Jae-yong was cleared of some charges. Could this simply be a case of putting a puppet for the father to pull strings?
I could leave it at that, but what really gets me is Jae-yong’s “qualifications”. From the linked story above:
“In 2000, Jae-yong led 14 Internet venture companies, including e-Samsung as the largest shareholder, but the companies became insolvent after just one year, with e-Samsung suffering 20 billion won in losses. Nine other Samsung affiliates purchased stocks in 2001 to make up for the loss and Samsung’s crown prince did not suffer any financial damage. ”
First lets make something clear. Note the phrase “including e-Samsung as the largest shareholder”. Now correct me if I am wrong, but something tells me Jae-yong did not work enough to raise the money to be largest shareholder of a business that would borrow the name of a major Chaebol to conduct business (and I am not even going to touch the legitimacy of any Samsung investment or business contracts). I think we can safely say that daddy, legitamtely or illegitimately, funded Jae-yong’s investments. And yet despite all these advantages for success (money, contacts, business contracts, etc.), Jae-yong still ran 14 companies into the ground!
You know, one would think by the odds alone one of the 14 would have been successful, yet Jae-yong was categorically unsuccessful. Since that string of failures against all odds Jae-yong got his job at Samsung, where as I far as I can he has one initiated, worked on, or even publicly announced any major Samsung project. Clearly this is not the profile of an executive able to take over one of the top technology companies in the world, let alone a Chaebol involved in other things. It does however make him the perfect patsy for his father.
(Yes some of you are right when you detect a personal animosity in this post. I do not know what more incendiary, if it’s some kid who has never worked a day outside of his dad’s safety net, gets everything handed to him, pisses it away, and then gets more, or if it’s that such a demonstrable buffoon so easily gets the keys to a company like Samsung.)
40 Comments
Amazingly, their stock is down today.
A couple of interesting quotes.
How exaclty did this one play out.
“Nine other Samsung executives, including Vice Chairman Lee Hak-soo, were also charged, but the independent counsel didn’t arrest the Samsung chairman, saying it “would cause enormous management disruptions.”
Police: Mr Lee you are under arrest.
Lee: If you arrest me then my managers wont know what to do and that will affect the company badly. We are Samsung you know!
Police: Ok, carry on.
I have been in Korea long enough to realise who you are and who you work for can have a big affect on your treatment when you break the law, yet it still amazes me!
Another great one…
“Samsung said it will try to use the Lee’s hidden assets in a “useful way,” after paying taxes.”
Probably taking the police, lawyers and judges an a nice holiday i would imagine!
Linkd,
Of course it’s down, it’s the stock market, not a bunch of MBA students working on a case study at Wharton, duh!
The stock market favor’s short term stability, not long term corporate governance.
It’s still Lee Kun-Hee’s company. Old, rich, powerful ajussi’s have a way of sticking around and throwing their weight even if they, on paper, don’t own a lick.
Trust me, I speak from personal experience.
Nice to see that dynastic succession is alive and well in corporate Korea…
OK, now it’s up.
@#4
Very true, even our company which is a fraction of the size kept our old boss on as a “consultant” for 2 years after he retired. Apparantly he was working or us 1 day a week…i probably saw him in our office for 1 hour a month. Considering he kept his driver, car, corporate card and was on 1/2 his previous salary for the duration of this i can only say its good work if you can get it!
# 6,
First they panicked. After lunch they realized that Lee’s resignation is a PR ploy and nothing more.
this might be a good time for korea to start diversifying its eggs in the basket. When one company is responsible for 20% of the nations exports, it certainly doesn’t bode well for the national economic outlook when said corporation is on the verge of being dismantled.
“…is on the verge of being dismantled.”
Ain’t gonna happen for awhile. It took a financial crisis to bust up certain chaebols.
Relative global economic stability (just slow), a conservative administration in power, the Chairman making face saving gestures, it doesn’t add up.
At some point in time the chaebols will be broken up, just not for the immediate, foreseeable future.
“this might be a good time for korea to start diversifying its eggs in the basket”
Unless all the chaebols are broken up then any move away from Samsung would see those eggs you talk about end up in the baskets of Daewoo, Hyundai etc.
Diversification indeed!!
Not that it will make ant difference in terms of de facto control - the puppets will have new faces — but the reports i haveread indicate that Lee fil also has resigned.
Seems Lee Jae-yong has also fallen on his sword:
http://tiny.cc/n8WKD
Notice also that Vice Chairman Lee Hak-Soo announced his impending retirement. That’s some interesting shit.
The real issue of significance, in terms of the potential for really fundamental change at Samsung, is whether the resignation of all the usual suspects portends any such change or will just serve as another occasion for Korea Inc. to close up the ranks with new supernumeraries as it did in the cases of e.g., SK, KT&G. -assuming that this also triggers some kind of run at control of Samsung. The very fact of these resignations strongly suggests the answer.
The more I read what’s going on, the more I think something more substantial then what I had first thought was only a superficial change appears to be taking place. Let’s see how the dust settles in the next 12 hours…
uuse splel cehck yuo dummb cutn
Gosh, dram-man, your description of Jae-yon’s qualifications, his many business failures, all the financial support he has received via his father and father’s contacts, etc sounds eerily familiar - much like a young Bush Jnr. I guess if he was American, you would be lauding him as presidential material…
“I think we can saftely say that daddy, legitmatly or illegmately, funded Jae-yong’s investors. And yet despite all these advtantages for sucess…”
Wow.
swlee> Thanks for the sharp eyes, I guess my auto-spellcheck in Wordpress under Safari is about as buggy as the auto-spellcheck in Mail.
If youre having problems with auto-spellcheck in Wordpress under Safari maybe you could try what I did. School.
Really? School? What kind? Petty Observation Academy? Troll U? Missing Contractional Apostrophe Tech?
OMG now the Dram_man is going into meltdown. I hope Robert nips this in the bud after I have the final word. I was only playing. I like your response. Missing Contractional Apostrophe Tech ㅋㅋ keep up the humour.
Corrections made. Thanks again for the sharp eyes.
uhh. . .
*blink blink*. . .
go soyeon?
(is it funny instead of mean this time because it’s self-referential instead of genuine? Discuss comment-board surfing as performance art for five minutes, starting now. . . )
Actually, Lee Kunhee’s resignation was the last play I expected. Really caught me off-guard. I’m impressed he has enough self-respect not to put on a hospital gown and make a play for pity, and intrigued at what machinations are at play here. We haven’t heard the last of this, but if he ends up in LMB’s cabinet, I’m going to be sorely disappointed.
Well, a lot of (gold)dust already has settled:
Even by Korean “standards”, that’s a lot of dosh to have stolen from your shareholders; and the criminal tax liability is grossly understated, because it obviously doesn’t include the taxes that are due in respect of the embezzled billions.
The move by the Lees and the other Samsung kleptocrats is probably part of a strategy to avoid going to jail, which otherwise conceivably might have not been avoidable given the gross size of their depredations or, even more plausibly, to forestall an effort to break up Samsung in order to ensure something like this never happens again - at least on this scale.
Still, I agree with the prudential perspective and join in watching to see what will happen when the next shoe drops.
I’ve always been curious about these assets hidden under someone else’s name. If I were one of these Samsung execs and I found an extra W100 billion or so in my account, I’d say, “Screw the old man, I’m going to Disneyland. These drachmas are in my fricken name.” Either that, or, “Gee, that extra money sure is burdensome, I think I’ll drop 7 million a night on a closed-legged juicy girl in Itaewon.”
Also, I may be missing something here, but if the guy “resigns,” even if in name only, wouldn’t he forfeit his “crucial for the well-being of the nation’s economy” stay-out-of-jail-free card?
In commemoration of this odd news, I offer this media event:
SAMSUNG MEANS TO COME
From King Baeksu (republished without his permission):
Dear swlee,
I didn’t quit, Robert banned me because he said I was a quote: “faggot assed gaylord with a chip on my shoulder caused by spurned advances from korean men in the sauna” . And then he made up a story about me quitting the hole. I will continue to go into the Marmots hole, only he forces me to wear a sock. Everybody was really nasty to me. Even after I stopped using the King Baeksu moniker people were being nasty about me, even saying I said things when I hadn’t. I’m really a nice guy, and US imperialism is kind of like a pumpkin with white sauce. It was nice to meet you in Marmots hole, you are a really funny guy and quite inciteful. I wish others in the hole were as cool as you. I think the Marmot thinks your cool too because he hasn’t banned you like he did to me.
ps, my new name is not Kushibo.
Bravo.
From King Baeksu (republished without his permission):
Dear swlee,
I replied to your email in good faith and expressly asked you not to publish it further. Why are you being such a loser. I can’t believe I said you were cool. You are just like the other losers in Marmots hole. fuck you
A chairman who investigators believe duped everyone to the tune of 4.5 trillion won, you say? Why, for that the prosecutors should have sequestered his ass and questioned him all day for weeks. Or, is that just for the likes of non-Korean CEOs like Grayken?
RE: #27 - the account might be in your name (ID number), but you might not have the chop that was used to open the account and which you need to take the money out - that’s in addition to the fact that some fairly powerful guys might start chasing you to get their money back. For #28. - I’d wondered about that as well - it seems like there’s no reason he needs to be allowed out of jail waiting for the trial if he’s not important for the economy anymore.
Not surprised that he handled it with class (no wheelchair/gown). I couldn’t picture him taking that route.
Resigning saved him from bathos, but stepping down — only under pressure, moreover — for defrauding your shareholders to the tune of 5 Billion US, and cheating the govt out of hundreds of millions in taxes, hardly qualifies as a “class” act.
36 Sprewer: good point. But you also have to agree it’s refreshing he didn’t sink as low as the others, and get out the IV drip and the hospital gown.
It’d be interesting to see if this finally, ACTUALLY leads to the transparency and consistency everyone from the IMF to the European Union to that Foreign Finance Advisor in LMB’s cabinet have been calling for. Because if Samsung leads, the other chaebols will eventually follow. . . and that’s the change Korea’s business culture seems to need more than anything else.
It might be that Mr. Lee leaving the company and bearing all the brunt of the corruption was the only way he could think of to keep the entire company from losing all credibility, in which case you gotta respect his final Pyrrhic gesture of taking one for the team by drawing all fire to himself personally, owning up, and lying in the bed he’s made.
On the other hand, three months after leaving through the front door, he might just sneak back in the side door.
These are interesting days for Korea’s corporate culture, and it’ll send a really positive message to international investors if they see that even Mr. Samsung can’t get away with corruption. (if he doesn’t)
I’m waiting for the Japanese tech conglomerates to make their moves, now that there’s blood in the water. Things just got really interesting.
swlee — It’s not cool to use smears like insinuating that J. Scott Burgeson is a homosexual. I think you owe the homosexuals an apology.
I know what you mean Brendon but I never made the allegation. He claims Robert called him that, however such phrasing seems out of character for Robert so I have my doubts. Unemployed bug may have been more appropriate to describe Scott, however the neo-fascist underlying connotation of the term bug combined with the imperio-capitalistic overtones inherent in the denigration of the suffering unemployed could have been deconstructed in the current phase of world history as a pseudo neologism.
At the risk of distracting from the theme of this thread, doesn’t anybody remember lee gon hee’s sudden trips to texas for lung cancer over the years at opportune times, or the fact that he had everything handed to him on a plate by his dad, who had himself sacrificed his eldest son (lee gon hees older brother) to the law when jeil jedang was caught for smuggling back in the 50s. theres nothing classy about the particular corporate yakuza. A class act would be following in his daughters footsteps.
Lee Jae-yong wouldn’t be the only person who lost shareholders (and his own) money in internet ventures, especially around the time that it all happened…
Most successful business people have some losses and some wins, with the latter out-weighing the former.