As information has given, Samsung Group Chairman Lee Kun-hee has just passed away, at the age of 78.
The departure of Chairman Lee this time is a huge pain for Samsung. Also it came at a rather sensitive time. Since he had to undergo medical treatment in 2014, Samsung “crown prince” Lee Jae-yong has replaced him as managing the group. However, ever since then, the storm has always come.
“Prince” constantly entangled the labor cycle
Earlier this week, the trial of the case of Samsung Electronics Vice President Lee Jae-yong accused of securities manipulation and violation of regulations that took place five years ago.
The prosecutor’s office said that the 52-year-old heir to Samsung was involved in the stock price manipulation incident of Samsung C&T and Cheil Industries when the two companies merged in 2015.
“Mr. Lee has worked to ensure the succession of his throne at the lowest cost, consolidating his control. We decided to charge him on consideration of significant charges. causing turmoil to the stock market, “said Lee Bok-hyun, a senior prosecutor at the Seoul Prosecutor’s Office.
The prosecutor also said that it was Lee who approved for accounting mistakes at Samsung Bilogics, a Samsung C&T subsidiary, to occur as part of his plan to consolidate power at the group. Mr. Lee is the largest shareholder in Samsusng C&T – a subsidiary of Samsung Group with 17.33% stake.
However, the prosecutor’s office has not yet filed an arrest warrant with Mr. Lee at this point – which means he has the ability to face the trial without being arrested and detained. The exact time of the hearing will be set by the court. Earlier in June, the court also rejected the prosecutor’s office’s request to arrest Mr. Lee related to another case.
This is not the first time Mr. Lee has been caught up in legal charges. In 2017, he was jailed on charges related to deposed former Prime Minister Park Geun-Hye but was released in February 2018. Currently, the court is trying to arrest him when the Supreme Court overturned the case last year. The trial is still pending and if a final decision goes against Lee, he could go to jail again.
With the latest allegations, prosecutors spent two years investigating after the Stock Exchange first said that they had noticed accounting violations occurring at Samsung Biologics. Prosecutors continued to expand the investigation of the transfer of power at the Samsung group last year, saying that the group’s management had overruled the value of Samsung Biologics to help Lee consolidate control.
Lee and Samsung denied any allegations that they did not violate the law and committed that all activities during the merger process of Samsung Biologics were under international accounting standards.
Being constantly entangled in the circle of justice has dragged a dark cloud around the world’s largest smartphone maker, especially in the context of a crisis over Covid-19 and the stresses. politic.
Reported record high profits but the future is still uncertain
The waves swarmed, but this time thanks to the “limited” rival Huawei that Samsung has benefited in no small amount. Specifically, in October, the group announced operating profit of 12.3 trillion won ($ 10.6 billion) in the three months ending in September, exceeding the forecast of 10 trillion won by experts. previous analysis. Sales for the quarter reached 66 trillion won. The company currently does not disclose net profit or disclose business results for each segment. The detailed numbers will be released later this month when the final report is released.
When Apple’s plans to launch a 5G iPhone were delayed to October and Huawei struggled with so many difficulties, Samsung was having an easier quarter than ever to compete in the mobile sector. Even so, the company has significantly improved profits by reducing marketing costs during the pandemic.
“Samsung will see higher margins in 2021 as Huawei continues to struggle,” said Lee Su-bin, an analyst at Daishin Securities. He added that Samsung will benefit from the rapid introduction of 5G and new focus on folding phones. He predicts Samsung will report sales of 80.6 million smartphones in Q3 – up 49% from Q2.
Although it has received much better business results than expected by analysts, the future of Samsung is still uncertain. Known for charges of securities manipulation and violation of accounting rules that “crown prince” Samsung is prosecuted if true, he could face the highest sentence of up to 10 years in prison.
This of course will be a situation that Samsung does not expect to happen because they will lose the leadership and direct management from the top boss.
Not to mention that more and more Chinese competitors and Huawei are also showing signs of recovery, making Samsung’s future growth momentum uncertain.
In addition, the question of the inheritance and who replaced Lee Kun-hee’s chairman at Samsung was also of concern. In addition to complications, the transfer of power at Samsung Group is too large in size, subject to careful scrutiny from the authorities.
According to Fatherland / General