Samsung Compliance Committee 2nd Term Launching on the 5th of Next Month
"Ensuring No Human Rights Violations Occur During the Abolition of Union-Free Management"
[Asia Economy Reporters Sunmi Park, Hyeyoung Lee] “We will do our best to deeply root a culture of compliance management within the company. The Compliance Committee will also provide recommendations on proper governance measures."
The Compliance Oversight Committee (Compliance Committee), an independent body for Samsung’s compliance and ethical management set to launch on the 5th of next month, has completed its committee formation and officially begun its second term. The committee plans to focus its work on establishing compliance management that prioritizes human rights and improving governance.
At a press conference held that day, Lee Chan-hee, the new Compliance Committee Chair, stated, "We will select tasks under the principles of human rights-first management, fair and transparent management, and establishing ESG (Environmental, Social, and Governance) management through governance improvement."
He emphasized that governance is a critical issue Samsung must resolve to advance. He said, "We will proceed cautiously from a macro perspective, but regarding specific methods, we will gather advice from external experts and opinions from internal members to present reasonable solutions." Regarding labor union issues, he added, "We will ensure that no human rights violations occur during the process of abandoning no-union management."
Following the achievements of the first term, which included a public apology to the nation, the abolition of no-union management, and the abandonment of fourth-generation management succession, the second term launching next month is expected to lead major tasks such as preparing governance improvement plans for Samsung Group and reorganizing the group-level control tower, focusing on further enhancing corporate transparency.
Samsung’s Compliance Committee was established in February 2020 following the appellate retrial court’s order in Vice Chairman Lee Jae-yong’s ‘state affairs manipulation case’ to set up an internal compliance monitoring system. The Compliance Committee is an independent organization that does not take orders from Samsung on the surface, with Samsung Electronics and seven major affiliates?Samsung C&T, Samsung SDI, Samsung Electro-Mechanics, Samsung SDS, Samsung Life Insurance, Samsung Fire & Marine Insurance?participating as signatories and subject to the committee’s oversight.
What are the immediate tasks for the second term launching next month?
Governance improvement is cited as the immediate task.
Three months after the Compliance Committee’s launch, Vice Chairman Lee declared the ‘abandonment of fourth-generation management succession,’ which has consistently raised calls for Samsung to restructure its governance to include a collective governance system led by professional managers rather than an owner-centered system. The new Compliance Committee, led by Chair Lee, plans to begin analyzing the results of ongoing consulting on governance improvement conducted by Boston Consulting Group (BCG) as soon as they are available. Based on the consulting results, the committee’s main task in the second term is to outline specific plans for Samsung’s governance restructuring and prepare detailed measures. Chair Lee said, "We want to promote improvements to governance that the public views as improper during the second term," adding, "The Compliance Committee will provide recommendations on proper governance measures."
How much the second-term Compliance Committee can overcome limitations regarding autonomy and independence remains a challenge. The committee’s duties and authority are fundamentally based on agreements made by the boards of Samsung affiliates participating in the committee. Since the affiliate boards effectively determine everything from the committee’s creation to its growth, development, and dissolution, including its duties, authority, and budget, concerns have been raised that the committee’s autonomy and independence could be compromised depending on the will of the group’s head. Chair Lee promised, "We will protect the committee’s independence and autonomy without wavering under any pressure."
Regarding the fact that only seven major Samsung affiliates, including Samsung Electronics, have agreements with the Compliance Committee, he dismissed the possibility of further expansion. He said it is currently unrealistic to expand to other affiliates with the current committee composition and personnel.
Meanwhile, the second-term Compliance Committee has newly recruited former Seoul Southern District Prosecutor Kwon Ik-hwan, Professor Hong Eun-joo of Hanyang Cyber University, and former Hanam Police Station Chief Yoon Sung-hye. Together with three existing members?Sung In-hee, Won Sook-yeon, and Kim Woo-jin?the committee will operate with one chair and six members, and after final approval procedures by participating companies, it will begin full-scale activities.
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