Scandal-hit Samsung reboots

The reforms announced on Tuesday were prompted by the influence-peddling scandal that has brought down President Park Geun-hye and her confidante Choi Soon-sil. The scope and boldness of the plans reflect how seriously Samsung and its jailed leader Lee Jae-yong are taking a crisis that has also engulfed the nation’s top family-run conglomerate. 
Samsung’s standout move is the abandonment of top-down, fleet-style management of its 59 affiliates. 
Most telling was the disbandment of the Future Strategy Office, which has acted as a control tower for the group since its founding in 1959.
Working under direct control of the boss, the office wielded strong power by taking charge of personnel, finances, audits, media relations and legal and government affairs for the entire group. The office also ensured control of the company was passed smoothly from one generation of the founding family to the next, while also liasing between the chairman, government officials and politicians. 
The Future Strategy Office stands accused playing a major role in handing illicit cash  Choi, which saw Samsung’s de facto chief Lee arrested and charged with bribery on Tuesday. 
Despite Lee’s earlier pledge to abolish the office, few expected him to act so swiftly while he was under investigation by state prosecutors and now an independent counsel. Observers were sceptical he could break away from a tradition cherished by his grandfather and father. 
As if to dispel the doubts, Samsung made it clear that each affiliate would now be run independently by its CEO and board. There will no longer be a regular meeting of CEOs.
Starting this autumn, there will be no more group-wide, simultaneous recruitment of new employees. The Internet home page and blog for Samsung Group will be shut down. In short, the name “Samsung Group” will fade into history. 
It remains to be seen how this bold experiment will affect the competitiveness of Samsung units, which employ a total of 500,000 people, make revenue of 400 trillion won ($350 billion) and account for 20 per cent of the country’s GDP. 
Another key reform measure, also prompted by the Choi scandal, is to increase transparency in donations and contributions. Samsung Electronics has directed that donations of 1 billion won or more to its coffers must now be authorised by the board.
That should certainly help prevent the family owners and other top executives from misusing company funds, which is exactly what happened in the Choi scandal. Other South Korean chaebol (family-owed corporations) such as Hyundai Motor, SK and LG should follow suit.
The four conglomerates and the steel giant Posco have already withdrawn from the Federation of Korean Industries, a business lobby that helped channel cash “donated” by the conglomerates to two foundations controlled by Choi. 
Samsung’s move to break away from traditions that have been identified with chaebol over the past decades will have a significant bearing on other conglomerates. How Samsung follows up on its brave restructuring will be closely watched.