November 22, 2024

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[THE INVESTOR] The anticipated extension of the ongoing investigation into the political scandal involving President Park Guen-hye is adding pressure on Samsung Group, which has postponed key management decisions fearing a backlash from political circles and the public

South Korea’s largest conglomerate is currently gauging the timing to conduct its annual reshuffle of top executives and restructuring of business divisions, both of which usually take place in December every year.

Sequentially, the annual hiring process for new employees in March will likely be put off. Some even forecast the conglomerate will abolish the annual recruitment session, through which it hired around 14,000 last year, and instead let its subsidiaries and affiliates have a separate hiring process when needed.

“If the ongoing probe into the political scandal is extended, the executive reshuffle and other management schedules have to be postponed to April,” said a Samsung official on condition of anonymity due to sensitivity of the issue.

“Things will become clear once the investigation is completed.”

The prosecutorial probe, which started on Dec. 21 last year, is scheduled to end on Feb. 8. If a request to extend the investigation period is granted by acting President and Prime Minister Hwang Gyo-ahn, the investigation team will receive 30 more days to look into the case.

Accused of having bankrolled 43 billion won (US$36 million) to impeached President Park’s crony Choi Soon-sil, Samsung Electronics Vice Chairman Lee Jae-yong has been grilled by the prosecution. The de facto Samsung leader, who was spared of detention last month, is still on thin ice as there is chance that he could face an arrest warrant again.

Samsung, meanwhile, plans to announce a series of measures to reform its outdated decision-making and management processes, which will include the disbandment of its de facto control tower Future Strategy Office.

Instead of the control tower for the entire business empire, the conglomerate will allow its flagship businesses, Samsung Electronics, Samsung C&T and Samsung Life Insurance, to play a crucial role in making key business decisions for its subsidiaries and affiliates.

By Kim Young-won (wone0102@heraldcorp.com)