Samsung scrutinizes donations

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Samsung scrutinizes donations

Published: 24 Feb. 2017, 19:34

Samsung Electronics announced a slew of measures on Friday meant to improve transparency in its social contribution program, after the company was found to have donated money to a friend of President Park Geun-hye allegedly in exchange for political favors.

Under the new rules, all donations and social contributions that exceed 1 billion won ($884,000) must be approved by the board of directors, in which outside directors hold a majority.

Until now, only spending that exceeded 0.5 percent of the company’s equity, roughly 680 billion won, had to be submitted for board approval.

The move comes after the company was found to have donated to foundations set up by President Park’s secretive confidante Choi Soon-sil, reportedly in return for political favors.

Samsung in a statement Friday said it has set up a “deliberative body” for tighter screening of donations and vowed to disclose all administered donations through company filings.

The deliberative body will consist of heads from the company’s finance, human resources and communications departments, and they will gather weekly to screen all contributions that exceed 10 million won. It will be a mandatory first step for all donations before the bigger 1 billion-plus donations are tossed to the board of directors for approval.

After approval, an audit committee fully composed of outside directors will oversee the execution process and outcome to further improve transparency, the company said.

Samsung is also likely to disband its controversial Future Strategy Office, which consists of key aides to Chairman Lee Gun-hee and has been accused of shady dealings, as early as next month. The company’s vice chairman, Lee Jae-yong, currently under arrest on bribery charges, vowed to close the office during a parliamentary hearing on the scandal in December.

The office’s top leaders - Choi Ji-sung and Jang Choong-ki - both longtime aides of the elder Lee Gun-hee, will reportedly resign to take responsibility for his son Lee Jae-yong’s arrest. The fate of the Future Strategy Office and the two aides will be decided after special prosecutors wrap up their investigation of the scandal on Tuesday, if the date is not extended.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]