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Samsung needs a boss

Korea’s top business group must think about recruiting an outsider like Guus Hiddink.
Feb 24,2017
What will happen to a Korean conglomerate if its emperor-like chairman goes to prison? Its top management would be entirely preoccupied with a full-fledged operation to free their chief. Business management and profit will be secondary as its primary attention will be focused on the Blue House. The conglomerate would also have to closely watch the political and media sectors as it campaigns to get its chief a presidential pardon on Liberation Day or Christmas Day.

A public relations officer of a conglomerate said that employees would dare not do anything that could hurt the chairman’s chance of release. “We take the hit when hit. We give when we are told to give,” he said. This is was what CJ, SK and Hanwha Group did until their bosses were finally released.

Samsung Group is in its worst crisis ever. The toll on its corporate credibility, which plunged to a ranking of 49 from seven in a recent U.S. survey of the 100 most visible companies in the world, is not it’s biggest worry. Its corporate governance overhaul also can wait.

But the country’s biggest business group should not become a scapegoat. The opposition is out to hold legislative hearings on labor conditions and occupational diseases at Samsung assembly lines. The group could be shaken down for various favors when its top chief is held hostage.

The ill fortune should stop with the arrest of Samsung Group leader and Samsung Electronics Vice Chairman Lee Jae-yong. The entire group must not be held liable for the sins of a few.

The first trial verdict for Lee on charges of bribery, perjury and misappropriation of corporate funds should come out around May given that the independent counsel act requires the Supreme Court to hand down a final ruling within seven months of charges being filed.

Lee’s trial will coincide with the presidential election depending on the verdict in the impeachment trial of President Park Geun-hye at the Constitutional Court. The country will be in flux following the impeachment. A former president behind bars won’t help the new administration get off to a fresh beginning. It may have to consider pardoning Park for national harmony.

If Moon Jae-in, the leading opposition camp candidate, gets elected, letting Park go would be the best he could do. Given his repeated pledges to reform the top four chaebol, he hardly can be expected to extend that generosity to Lee. His support base of unions and anti-chaebol civilian groups would not allow a pardon of Samsung’s head honcho.

If removal is rejected by the Constitutional Court, the country could find itself in greater unrest with furious protests across the county. Park would have saved her title, but she would no longer have any authority. Therefore, the administration would be in no position to free Lee. In almost any scenario, Samsung could be without its chief for a while.

There is some hope if South Chungcheong Governor An Hee-jung wins the election. He has offered to take up any good policies of former presidents, including conservatives Lee Myung-bak and Park Geun-hye. Gov. An has the support of the loyalists to President Roh Moo-hyun. He thinks that reforming the chaebol is an issue separate from punishing their owners. Samsung may be praying for An’s victory. But it won’t be easy for An to combat challenges from his party mainstream.

In the meantime, Samsung must think about recruiting an outside business wunderkind to run the group on behalf of the Lee family. It could seek an entrepreneurial version of Guus Hiddink, the Dutch-born soccer coach who helped Korea win its highest-ever ranking at the 2002 World Cup and gave hope to the entire Korean population. SK Group and CJ Group were run by Kim Chang-geun and Sohn Kyung-shik while their chairmen were imprisoned. Kim and Sohn were recruits from within and showed clear limitations. They could hardly fight back political demands and outside pressure.

Under such circumstances, a foreign chief executive could be a better option. It could be someone from the American IT industry who is capable of effectively responding to President Donald J. Trump or someone from China. Of course, there could be concerns about potential leaks in corporate privacy. But that risk could be better than jeopardizing the entire business group. Although it did not work out well in the end, Softbank chief executive Masayoshi Son recruited Google’s sales chief Nikesh Arora for the second-in-command position.

In a National Assembly hearing, Lee said he was willing to yield his position to someone who is better than him. He is well connected with top CEOs around the world, including Mark Zuckerberg of Facebook, Tim Cook of Apple, Joe Kaeser of Siemens, and Satya Nadella of Microscoft. It won’t be difficult for Lee to find a qualified candidate.

An outside expert could help Samsung in many ways. First of all, Samsung would be less harassed with outside pressure. The corporate culture could finally change. Its corporate image would gain a huge uplift and it may finally look like a proper multinational company.

JoongAng Ilbo, Feb. 23, Page 30

*The author is a columnist of the JoongAng Ilbo.

Yi Jung-jae