Samsung heir apologizes over corruption scandal

Lee Jae-yong, vice-chairman of Samsung Electronics, was jailed for five years in 2017 for bribery, embezzlement and other offenses in connection with the scandal that brought down South Korean president Park Geun-hye. (Reuters)
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Updated 06 May 2020

Samsung heir apologizes over corruption scandal

  • ‘I will make sure that there will be no more controversy over the succession of management’
  • ‘I will never take any actions that go against the law’

SEOUL: The heir to the Samsung empire bowed in apology Wednesday for company misconduct including a controversial plan for him to ascend to the leadership of the world’s largest smartphone maker.
Lee Jae-yong is vice-chairman of Samsung Electronics and was jailed for five years in 2017 for bribery, embezzlement and other offenses in connection with the scandal that brought down South Korean president Park Geun-hye.
The 51-year-old was released a year later on appeal but is currently undergoing a retrial.
“Our technology and products are being hailed as first-class but the public gaze toward Samsung still remains harsh,” Lee said. “This is my fault. I apologize.”
Lee bowed three times before flashing cameras at a Samsung Electronics office in Seoul, where reporters sat apart under coronavirus distancing rules.
He will not allow his children to succeed him at the firm, he said in steady tones, swallowing occasionally.
“I will make sure that there will be no more controversy over the succession of management,” Lee said, adding: “I will never take any actions that go against the law.”
Wednesday’s apology came at the request of Samsung’s compliance committee, which oversees the firm’s transparency in its corporate dealings.
Lee has effectively been at the helm of the sprawling Samsung group since his father and group chairman Lee Kun-hee was left bedridden by a heart attack in 2014.
The court case centered on millions of dollars the Samsung group paid Park’s secret confidante Choi Soon-sil, allegedly for government favors including ensuring a smooth transition for Lee to succeed his ailing father.
The scandal highlighted shady connections between big business and politics in South Korea, with the ousted president and her friend accused of taking bribes from corporate bigwigs in exchange for preferential treatment.
Samsung Electronics is the flagship subsidiary of the group, which is by far the biggest of the family-controlled conglomerates, or chaebols, that dominate business in the world’s 12th-largest economy.
Its overall turnover is equivalent to a fifth of the national gross domestic product and it is crucial to South Korea’s economic health.
Chairman Lee Kun-hee is listed as South Korea’s richest man — and the world’s 65th — by Bloomberg Billionaires, with a fortune estimated at $15.7 billion, while Lee Jae-yong has a separate listing of his own, and a net worth of $5.7 billion.
In March, the Samsung compliance committee — which was set up in response to a court order — said many “disgraceful” incidents involving the Samsung Group were linked to an alleged succession scheme for Lee and advised him to apologize publicly.
It also recommended that Lee address Samsung’s previous “no labor union” policy.
For almost 50 years Samsung successfully avoided the unionization of its workers — sometimes adopting ferocious tactics according to critics — until last November.
“I sincerely apologize to everyone who has been hurt by issues involving Samsung’s labor union policy,” Lee said.
The company will guarantee workers’ rights and act in accordance with employment regulations, he added.
Samsung reported a slight fall in first quarter net profits last month at 4.88 trillion won ($4 billion), citing impacts of the coronavirus pandemic.
But the firm — which saw operations suspended at 11 overseas assembly lines — warned of further falls to come as consumer demand is “significantly” hit by the disease.


HSBC reports lighter-than-expected third-quarter profit fall

Updated 27 October 2020

HSBC reports lighter-than-expected third-quarter profit fall

  • HSBC has a further headache – geopolitical tensions via its status as a major business conduit between China and the West

HONG KONG: HSBC said Tuesday its third-quarter post-tax profits fell 46 percent on-year as the Asia-focused banking giant continued to take a hammering from the coronavirus pandemic and spiraling China-US tensions.
However, the profit falls were not as bad as some analysts had predicted and HSBC said it expected credit losses to be at the lower end of a previously announced $8 billion to $13 billion range.
The global economic slowdown caused by the virus has hit financial giants hard and there is limited optimism on the horizon as Europe and the United States head into the winter with infections soaring once more.
HSBC has a further headache — geopolitical tensions via its status as a major business conduit between China and the West.
As a result, the lender is in the midst of a worldwide overhaul, aiming to slash some 35,000 jobs by 2022, primarily in its less profitable European and American divisions.
“We are accelerating the transformation of the Group, moving our focus from interest-rate sensitive business lines toward fee-generating businesses, and further reducing our operating costs,” chief executive Noel Quinn said in a statement accompanying the results.
Reported post-tax profit for the third quarter came in at $2 billion with revenue down 11 percent at $11.9 billion, the statement said.
Adjusted pre-tax profit slid 21 percent to $4.3 billion in the period, beating a $2.8 billion estimate by Bloomberg analysts.
Quinn described the latest figures as “promising results against a backdrop of the continuing impacts of Covid-19 on the global economy” as well as low interest rates.
In the first six months of 2020, HSBC’s post-tax profits were down 69 percent, meaning the third-quarter results were something of an improvement as some major economies relaxed some of their coronavirus restrictions.
The bank said its board would consider whether to pay “a conservative dividend” for 2020 based on final end of year results and how the global economy looks in early 2021.
Earlier this year, UK regulators called on British banks to scrap dividends for the year to preserve capital during the pandemic crisis.
HSBC makes 90 percent of its profit in Asia, with China and Hong Kong being the major drivers of growth.
As a result, it has found itself more vulnerable than most to the crossfire caused by the increasingly bellicose relationship between Beijing and Washington.
The bank has tried to stay in Beijing’s good graces.
It vocally backed a tough national security law that Beijing imposed on Hong Kong in June to end a year of unrest and pro-democracy protests.
The move sparked criticism in Washington and London but analysts saw it as an attempt to protect its access to China, which has a track record of punishing businesses that do not toe Beijing’s line.
“Geopolitical risk, particularly relating to trade and other tensions between the US and China, remains heightened,” HSBC said in Tuesday’s profit statement.
The US has sanctioned nearly a dozen key Hong Kong and Chinese officials over the national security law, telling international banks to stop doing business with them.
China’s national security law, however, forbids businesses in Hong Kong from adhering to foreign sanctions regimes, leaving many in an unclear regulatory tight spot.
“Investor and business sentiment in some sectors in Hong Kong remains dampened and ongoing tensions could result in an increasingly fragmented trade and regulatory environment,” HSBC said in its statement.
The bank also highlighted the uncertainty over Britain’s withdrawal from the European Union as another potential headwind.
Talks for a post-Brexit trade deal have made little headway with a 31 December deadline fast approaching.
“There is a risk of additional ECL (expected credit losses) charges, particularly in the UK in 4Q20, if the UK and the EU fail to reach a trade agreement,” the bank said.