Beautiful Virgin Islands

Saturday, Jul 05, 2025

Samsung patriarch’s death spurs calls to reform South Korea’s chaebol

Samsung patriarch’s death spurs calls to reform South Korea’s chaebol

The death of Lee Kun-hee has focused attention on the darker aspects of his legacy, and rekindled long-standing calls for reform of family-run conglomerates.

In the days following the death of Samsung Group leader Lee Kun-hee, condolences and praise poured in from the highest echelons of South Korea’s business and political elite.

President Moon Jae-in described Lee as an “icon” of Korean business who had displayed “audacious and innovative leadership” to turn Samsung
into a global tech powerhouse known for its semiconductors and smartphones.

Euisun Chung, chairman of the country’s largest carmaker, Hyundai Group, told reporters that Lee, who was chairman of group crown jewel Samsung Electronics, had instilled in South Korean industry the desire to “be the best”.

Yet amid the adulation, the Samsung patriarch’s death has focused attention on the darker aspects of his legacy, and with it, rekindled long-standing calls for reform of the family-run conglomerates, or chaebol, that dominate Asia’s fourth-largest economy.

Lee Nak-yon, the chairman of Moon’s governing Democratic Party and a likely future presidential contender, said that while Lee had exemplified business leadership, he had been responsible for “negatives” such as increasing the economy’s heavy reliance on the chaebol and suppressing unions.

Jeong Ho-jin, chief spokesperson for the minor left-wing Justice Party, went further, insisting South Korea had to “erase the shadow of the dark history” of cosy relations between business and politics that Lee left behind.

Although credited with powering South Korea’s rise to first-world status within a generation, the chaebol have long been a source of public ire due to their reputation for corruption and unfair business practices, and their opaque and complex leadership structures that have allowed founding families to retain control with only a small minority of shares.

“Samsung critics will make an argument that the governance issue actually has discounted the price of related stocks,” said Auh Jun Kyung, an assistant professor at Yonsei University School of Business, pointing to the rise in stock prices of a number of Samsung affiliates after Lee’s death.

“I think the circular holdings is the area that needs a change,” said Auh, referring to cross-shareholdings between affiliates that enabled the Lees to keep control as Samsung grew into a business behemoth. “Such a large gap between control and ownership exacerbates all the issues related to incentive misalignment.”


Samsung Electronics vice-chairman Jay Y. Lee, right, his mother Hong Ra-hee, centre, and his sister Lee Boo-jin, left, arrive at the funeral of Lee Kun-hee in Seoul.


Lee, who died on Sunday after spending the last six years in a coma following a heart attack, took control of his father’s business empire in the late 1980s. He was twice convicted of white-collar crimes, including embezzlement, tax evasion and bribing the president, and received a presidential pardon both times.

His son and presumed successor Jay Y. Lee, 52, known in South Korea as Lee Jae-yong, is facing two separate legal cases, including his retrial over allegations he gave bribes to a confidante of impeached former president Park Geun-hye.

A separate trial related to the merger of two Samsung units that prosecutors allege was manipulated to boost Lee’s control of the group is set to get under way in January.

The younger Lee, who along with his sisters face an inheritance tax bill of up to US$10 billion, had been widely considered de facto leader of the group since his father became incapacitated in 2014.

“The most effective reform would be the court ruling that would put Jay Y. Lee in jail, and block him from serving as an executive of Samsung Electronics,” said Woochan Kim, a professor at Korea University Business School in Seoul.

“That would give a strong signal to the rest of the business community that business executives should no longer try to give bribes or manipulate stock prices to benefit themselves at the expense of minority shareholders.”

Like successive left-leaning leaders before him, Moon campaigned on sweeping chaebol reform, once including the conglomerates among a list of “deep-rooted evils” plaguing South Korea society.


A Samsung flag flies at half-mast outside the company's Seocho building in Seoul on October 28.


But after taking some steps to rein them in – such as appointing Kim So-jang, a veteran corporate activist known as the “chaebol sniper”, to lead the Fair Trade Commission – Moon has been accused by activists and unions of abandoning his pledges to secure industry support for his economic plans and rapprochement with North Korea.

Eugene Kim, managing partner of advisory firm Egon Zehnder’s Seoul office, said successive South Korean administrations including Moon’s had blinked on structural reform due to fears of the economic fallout.

“They have always been scared when you have a slumping economy or a difficult marketplace and people have been blaming the government for the bad economic situation,” said Kim, adding that the prosecution of individual executives did not address the deeper problem of chaebol leadership structures. “You either change or you don’t change.”

The top 10 chaebol generated revenues that amounted to nearly 50 per cent of South Korea’s GDP in 2017, according to corporate website CEO Score. Samsung Group – whose businesses span electronics, insurance, construction, shipbuilding, and arms – has been estimated to account for 20 per cent of the country’s US$1.5 trillion economy.

In an apparent signal of his willingness to turn his attention back toward the chaebol, Moon on Wednesday called for bipartisan support for a number of “fair economy” bills that would boost shareholder rights and management oversight, and increase the bargaining power of franchisees.

Samsung, too, has attempted to read the public mood.

In May, Jay Y. Lee made a rare public apology over the controversy surrounding his succession, and pledged not to pass on control of the company to his children when the time came.

“That is an admission of the limitations of the chaebol system – the chaebol chairman is publicly acknowledging that this system is not going to last forever,” said Chang Sea-Jin, a South Korean-born professor at National University of Singapore Business School. “If the government strictly enforces this inheritance tax system, the chaebol will go away in 10 or 20 years.”

Although it is “very easy to break the system”, it would take time to build something better, Chang added.

Many, though, do not see real change happening under the initiative of the government or the chaebol themselves.

“The Korean government already had the opportunity to clean up the chaebol,” said Geoffrey Cain, author of Samsung Rising: The Inside Story of the South Korean Giant That Set Out to Beat Apple and Conquer Tech.

“If anything, we’ll see the opposite. Jay Lee is under pressure to get enough shares and pay the inheritance tax, so we could see more shady shareholding deals in the coming months that would solidify his control at the expense of shareholders.”

Kim, the Korea University Business School professor, was blunt in his assessment of the likelihood of Moon leading major reform.

“If he does, that would be a miracle,” he said.

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
Poland Implements Border Checks Amid Growing Migration Tensions
Political Dispute Escalates Between Trump and Musk
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
US Senate Votes to Remove AI Regulation Moratorium from Domestic Policy Bill
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
Jury Deliberations in Diddy Trial Yield Partial Verdict in Serious Criminal Charges
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
King Charles Plans Significant Role for Prince Harry in Coronation
Two Chinese Nationals Arrested for Espionage Activities Against U.S. Navy
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
Trump Administration Considers Withdrawal of Funding for Hospitals Providing Gender Treatment to Minors
Texas Enacts Law Allowing Gold and Silver Transactions
China Unveils Miniature Insect-Like Surveillance Drone
×