Beautiful Virgin Islands

Saturday, Jul 26, 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
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
Microsoft, US Lab to Use AI for Faster Nuclear Plant Licensing
Trump Walks Back Talk of Firing Fed Chair Jerome Powell
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Irish Tech Worker Detained 100 days by US Authorities for Overstaying Visa
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
×