Korea Fair Trade Commission chief Kim Sang-jo again urged Samsung Group vice chairman Lee Jae-yong to make a decision regarding Samsung Life Insurance's stake in Samsung Electronics.
At a meeting of top CEOs on May 10, Kim said, “Samsung’s current governance structure based on Samsung Life Insurance's shareholdings in Samsung Electronics is not sustainable. Eventually, Lee needs to make a decision on how to sell Samsung Life’s stake in Samsung Electronics.”
Kim's renewed pressure on Samsung Group to reform its governance structure came one day after Financial Service Commission (FSC) Chairman Choi Jong-ku said in public, “Samsung Life Insurance needs to find a way to sell its stake in Samsung Electronics itself.”
Kim had a meeting with CEOs of the nation's top ten conglomerates at the Korea Chamber of Commerce and Industry (KCCI) in Seoul. Participants included Samsung Electronics vice chairman Yoon Boo-keun, Hyundai Motor vice president Chung Jin-haeng, SK Innovation president Kim Jun, LG Group vice chairman Ha Hyun-hwoi, Lotte Group vice chairman Hwang Kag-gyu, GS Group vice chairman Jung Taek-geun, Hanwha Group vice chairman Kum Chun-soo, Hyundai Heavy Industries vice chairman Kwon Oh-gap, Shinsegae president Kwon Hyuk-gu and Doosan president Lee Sang-hoon.
Kim discussed mainly Samsung’s governance structure reform at the briefing right after the closed meeting. He didn’t press Samsung to set a deadline as he did before, but he still put much pressure. Kim said, “Samsung also knows that the current governance structure is not sustainable. To be sure, it is a time-consuming and difficult problem. However, Samsung should know that not making a decision and passing time is the worst decision it can make.”
Samsung Life Insurance, which holds 8.23 percent of Samsung Electronics, is under pressure to sell the stake before the amendment of the Insurance Business Act. When the evaluation method for shareholdings changes after the amendment of the law, Samsung Life Insurance is required to sell its stake in Samsung Electronics worth about 20 trillion won (US$18.66 billion).
However, the company is in dilemma as the owner family of Samsung Group does not have the money to take over its stake in Samsung Electronics. Other group affiliates cannot purchase the stake either because of the ban on cross shareholdings.
In regard to Kim’s remarks, Samsung Electronics vice chairman Yoon said, “We are thinking out the problem.” However, Kim urged quick action, saying, “The longer it takes for Lee to make a decision, the more costs Samsung and the Korean economy need to pay.”