Samsung Electronics chief apologizes for scandal, rejects calls for company reform

Samsung Electronics says sorry for its involvement in the scandal that led to South Korea's president being impeached. CEO Jay Y. Lee was accused of bribing Choi Soon Shil, a long-time confidante of former president Park Geun Hye, in return for government support for a deal.

During Samsung's annual meeting in Seoul, chief executive Kwon Oh-hyun apologized for the company's involvement in the scandal. It can be remembered that former president Park Geun Hye allegedly colluded with her friend Choi Soon Shil to extort millions of dollars from big conglomerates under the guise of donations to two foundations controlled by Choi. Further, Park also abused her power by letting Choi meddle in state affairs.

Samsung's Lee, who is currently awaiting jail time, has vehemently insisted that the money was given as a goodwill donation. Unlike the accusations brought against him, Lee contested that the money was not given in return for government support for a merger of two Samsung subsidiaries that will pave way for his succession. The company, on the other hand, has pledged to improve its corporate governance following the scandal and Samsung Note 7 recall.

The South Korea-based company also addressed the fallout from last year's failure of the Samsung Note 7 in which it had to abandon production of the smartphone after several of them was caught in a fire. "I apologize once again for the mistake with the Note 7 last year. It was a failure that arose from trying new technology," Kwon said. The Note 7 fiasco cost the company around $6 billion.

Restructuring

Samsung Electronics, on Friday, also announced that it would not be changing its corporate structure to use a holding company. Investors have expected the global leader in smartphones to adopt a holding company structure as the founding Lee family tries to solidify its control of the Samsung Group. But Kwon notes the negative effects that would arise from transitioning to a holding company without further elaboration on what those effects would be.

The company is continuing its review and will report the results to shareholders when it is completed. Meanwhile, the comment sent shares of Samsung C&T Corp down more than seven percent in afternoon trade. Analysts believed the Lee family would soon seek to merge with C&T Samsung Group's de facto holding company that Lee heirs control, with the Samsung Electronics holding company.