Chung Sung-Jun, Getty Images
Samsung vice chairman Lee Jae-Yong remains in detention facing charges including bribery and embezzlement.

Samsung Apologizes to Shareholders for Involvement in Scandals

March 24, 2017
Presidential ousters and  recalled phones contributed to a bad year for Samsung. The South Korean leader has pledged to have a better 2017.

Samsung Electronics Co. apologized Friday for its involvement in scandals that have led to the ouster of South Korea’s president and the recall of its Note 7 smartphones, pledging to improve governance in the face of pressure from investors.

Vice Chairman Kwon Oh-hyun delivered the apology at the smartphone maker’s annual shareholder meeting in Seoul. Jay Y. Lee, heir apparent at the smartphone giant, was absent as he remains in detention facing charges including bribery and embezzlement.

Prosecutors accuse Lee of bribing a confidante of former President Park Geun-hye in return for the government backing of a 2015 merger that helped him tighten control over the South Korean technology giant. Samsung denies Lee did anything wrong and said court proceedings would reveal the truth. The fire-prone Note 7 was eventually killed off, with the debacle over its batteries estimated to cost the company about $6 billion.

“I’m sorry for the scandal,” Kwon said, maintaining that the company didn’t pay bribes in the form of donations. “I apologize once again for the mistake with the Note 7 last year. It was a failure that arose from trying new technology.’

Kwon said the company isn’t considering a stock split and any move toward a holding company “doesn’t look easy” at this time. The company is reviewing its options and looking at areas including legal and tax. 

Samsung shares fell 1% to 2.068 million won ($1,847.55) in Seoul. The stock reached a record high this month on the back of robust semiconductor sales and the potential for a restructuring of the technology giant. Samsung said in November it was reviewing the idea of splitting into holding and operational companies, seeking to address investor concerns about its corporate governance structure.

Lee’s trial in Seoul’s Central District Court began March 9 with the next hearing planned at the end of the month. The trial overshadows the unveiling of Samsung’s flagship S8 smartphone next week that the company hopes will revitalize its mobile business after the Note 7 recall.

By Sam Kim

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