There is growing criticism that the revision proposal on the "Law on Structural Improvement of the Financial Industry" is about accommodating Samsung. The law requires approval when a financial company acquires five percent or more of a company in the same conglomerate. At the beginning of this week the government decided on a revision proposal that would strengthen measures taken when the law is violated. It will also make it possible to limit voting rights and disposal orders.
The problem is with existing stakes. The revision proposal would recognize what Samsung Life already owns of Samsung Electronics, and while Samsung Card would have restrictions on its voting rights in Everland, of which it owns 25.6 percent, that would be excluded from disposal orders. Civic groups say that is about giving Samsung a break. Samsung Life's stake in Samsung Electronics is key to chairman Lee Kun Hee's management rights and Samsung Card's stake in Everland is key to his son Lee Jae Yong's inheritance of management rights in the group.
The government says that court judgments and expert opinion made it sound like it would have been difficult to make the law go farther retroactively. That you can understand, but you cannot rid yourself of suspicions that the government was too passive in doing something about the problem. Article 13 of the constitution prohibits retroactive legislation relating to criminal proceedings or seizing property, and there is room for argument about whether this particular law can be seen as an eventual means of seizing property. Samsung Card's acquisition of its stake in Everland was illegal. Is there any need for the executive branch to keep the law from being applied retroactively even in such a case? We hope to see the National Assembly discuss the issue over again.
It is regrettable to have the law be the subject of controversy along with the recent constitutional petition, all because of Samsung's management structure. Having a company that represents Korea move back and forth between legality and illegality in order to maintain the management rights of the tycoon's family is not good for the national economy or even for Samsung. We again call on Samsung to take the initiative in creating a management structure that is aboveboard and leaves no room for controversy.
The Hankyoreh, 8 July 2005.
[Translations by Seoul Selection (PMS)]
[Editorial] Samsung Needs Honest Management Structure |
