[EDITORIALS]Harmonize law with realityA Seoul court ruled that Samsung Everland’s issuance of convertible bonds at a low price was a dereliction of duty.
The verdict indicates that Everland’s management created a loss to the company by issuing convertible bonds at an unreasonably low price to the children of Samsung Group Chairman Lee Kun-hee. The court also ruled that the action had the purpose of assisting an illicit ownership transfer.
The court said in its ruling that it is difficult to accurately calculate the appropriate share price of a company that is not listed. Despite such a position, the court still ruled that the bond price was unreasonably low, and Samsung may feel it is unfair. Samsung, however, must accept the lower court ruling and calmly conclude its position.
The court did not accept Samsung’s argument that the 1996 convertible bond issue was a customary practice of the time legitimately carried out to save tax payments.
Although the practice may have respected laws, taking advantage of legal loopholes will no longer be tolerated, the court indicated in its ruling.
Samsung’s reputation as a world-class business group was damaged at home and abroad by the ruling. The damage to its corporate image and pride may run deep, but how Samsung copes with this crisis may provide an opportunity for it.
The company must reinforce its sense of responsibility and ethical awareness to meet the reputation of the nation’s top conglomerate and a global leader. Samsung must find ways to be reborn as a company that can be highly evaluated by the people.
It is also important that the ruling must not be used to encourage anti-business sentiment and the recent boom in criticizing Samsung. Samsung is indisputably one of Korea’s few companies that are leading the nation’s economy and providing jobs to the country’s young talent. Using the ruling to threaten Samsung’s management by prompting popular anger against the firm will help no one.
We want to see a resolution that is in harmony with the law and reality. While respecting the ruling, Samsung must find ways to survive as a company. Those involved in the legal controversy must reach a wise agreement in order to maintain Samsung’s competitive power and respect heightened ethical standards at the same time.
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