(EDITORIAL from the Korea Times on June 1)

Regrettable Ruling: Samsung Should Do All It Can to Regain Trust

It seems as if the higher up judges go on the judicial ladder here, the pettier
their legal interpretations become.

That must be how most Koreans felt Friday watching the Supreme Court's acquittal
of the abnormal transfer of management control of the Samsung Group from former
chairman Lee Kun-hee to his son, Jae-yong.
In reaching the 6-5, not-guilty ruling, the top court largely stuck to the
narrowest meaning of the law over whether the massive below-market-price selling
of Everland's shares to the heir-apparent has incurred losses on the group's
holding company ??? rather than watching the ``broader reality" that the elder
Lee has bequeathed a several-billion-dollar business empire to his junior by
paying little more than $1 million in taxes.
One feels more despondent than disappointed when considering what the nation's
highest legal institution sought to protect with this ruling ??? the national
economy in the middle of the global economic crisis or social stability amid
deepening popular grievances about widening income polarization. Whatever it may
be, the nation's legal system and its economic justice have suffered another
setback.
The problems would appear less serious had Samsung not been the corporate giant
that best represents Korea in the world, whose business scope ranges from
semiconductors to supertankers and skyscrapers. The contrast can hardly be
starker between the global front-runner with state-of-the-art technology and
19th-century corporate governance, marked by an intricate web of interlocking
share ownership.
Hard to ignore in reality is whether the junior Lee has the ability to inherit
and continue to expand the business empire, like his father has done. If not, the
loss will not stop at the business group but will spill over into the entire
national economy. Unfortunately, the 39-year-old son has yet to show
corresponding corporate acumen.
As things stand now, one can hardly rule out the possibility that foreign
investors who own up to 50 percent of equity in some Samsung affiliates will take
issue with the change of command within the family. Nor is it a secret that a
considerable number of rank-and-file Samsung employees have been unofficially
complaining about the top-down decision-making, which disregards means and
processes in blind pursuit of results, as well as the lack of ``horizontal"
communication.
The nation's largest conglomerate has just received a legal indulgence after a
13-year trial, but that can hardly mean it has won popular pardon.
If the nation's largest and most famous conglomerate is to jump from a good to a
great company, the restoration of moral superiority and transparency is more
urgent than anything else. A good way of moving to the status of most respected
company, too, is to loosen the family's grip and give more autonomy to
professional managers.
(END)