Three affiliate companies in the Samsung group, Samsung Life Insurance, Samsung Fire & Marine Insurance, and Samsung Corp, have filed a petition with the Constitutional Court about the part of the Fair Trade Law that sets limits on the voting rights of financial companies within the group. The claim is that the law in an infringement on property rights and the right to equality. This is a law that was passed by the National Assembly last year after intense debate. It includes the stipulation that jaebeol affiliated financial companies may exercise only 15 percent of their voting rights in fellow jaebeol companies they own shares in, starting in 2008. The idea is to prevent jaebeols from using money entrusted to financial companies to strengthen control by the jaebeol's tycoon.
Everyone has the right to file a constitutional petition. Still, it is hard to look at Samsung's filing of a constitutional petition very approvingly. The group says that it arrived at the decision out of a desperate desire to defend Samsung Electronics, in which chairman Lee Kun Hee and his family own only a 3.3 percent stake, from a hostile takeover. The dominant view is that there is almost no possibility Samsung Electronics could be hit with a hostile takeover, however, and even if there is a little risk of that you cannot have customers' money being used to defend the tycoon's managerial rights. It is a question of economic justice even more than it is an issue of the principle of separation of financial and industrial capital.
Samsung should stop trying to turn back the clock. What it should be doing is building a management structure that is entirely aboveboard. It has grown to be a global conglomerate, but its management is still in the feudal age. The reason you hear the term "Republic of Samsung" is because of its management structure in which ultimately everything is decided by a single tycoon. The answer is already out there. All that is left is for Lee and the rest of Samsung is to make a profoundly changed and agonizing decision. The Toyota family owns less than 1 percent stake in the Toyota Motor Corporation, a global Japanese company. Because it owns so little, it does not try to exercise supreme power. And still the Toyota household is the key psychological pillar of the company and it works with management professionals to continue the Toyota legend.
The Hankyoreh, 1 July 2005.
[Translations by Seoul Selection (PMS)]
Samsung Wrong About Constitutional Petition |
