Compliance committee recommends Samsung rejoin FKI with strings attached

August 18, 2023

An independent corporate compliance oversight committee of Samsung Group recommended Friday the country’s biggest conglomerate rejoin a business interest group that it withdrew from years ago amid a high-profile corruption scandal involving its de facto leader Lee Jae-yong and the ousted former President Park Geun-hye.

The committee, however, said Samsung should leave the Federation of Korean Industries (FKI) again if another corruption case occurs.

“We have recommended that Samsung immediately drop out of the FKI if the interest group continues to maintain its cozy relationship with the government, and that Samsung thoroughly review measures on how it will ensure accounting transparency,” Committee Chairman Lee Chan-hee told reporters after the meeting.

“The most contentious point of the discussion was whether the cozy relations (between businesses and governments) can be severed for good,” he said, stressing that the FKI should be able to hire its employees and run daily operations without political interference.

Samsung Group’s 15 affiliates pulled out of the business interest group in early 2017, acting on a pledge by Lee, executive chairman of Samsung Electronics Co., to clean up the business after the scandal.

Samsung had been deeply implicated in the scandal surrounding former President Park and her close friend Choi Soon-sil, who forced leading business groups to make donations to sports and culture foundations controlled by Choi through the FKI.

Samsung’s de facto leader Lee was sentenced to 2 1/2 years in prison over the bribery case in early 2021, but he was released on parole in August that year. A year later, he was fully reinstated upon receiving a presidential pardon.

In 2020, Samsung launched the compliance committee to monitor the company’s compliance with laws and ethics, after a court ordered Lee in October 2019 to devise measures for preventing ethical lapses at Samsung.

The recommendation on Friday is likely to ignite discussions among the three other largest conglomerates — SK Group, LG Group and Hyundai Motor Group — whether to rejoin the lobbying group.

Meanwhile, the FKI announced a reform plan in May, under which it will change its name and incorporate the Korea Economic Research Institute.