Samsung chief speaks on group`s corruption scandal

Samsung Group is known to have found irregularities such as embezzlement, provision of entertainment from partner companies, and lax management of employees in audits on affiliates.

Samsung Chairman Lee Kun-hee told reporters on his way to work Thursday, “Corruption at Samsung Techwin was discovered by accident but seems to be prevalent throughout the group. It’s not good to talk about others, but other companies are in the same situation.”

On the types of corruption committed by group staff, he said, “They include receipt of entertainment and bribery, but worst of all is forcing subordinates to commit corruption.”

As if resolved to stand against corruption, Lee approached reporters first and invited them to ask questions.

The chairman was reportedly so embarrassed about the audit results, he went public with the corruption in Samsung affiliates, according to group sources.

According to sources in and out of Samsung, the group conducted intensive management assessment of its major affiliates from December last year through the first half of this year.

A management assessment team at the group’s future strategy department assesses the management of each affiliate on an irregular basis. The assessment is equal to audits conducted by other companies.

Though Samsung officially said the audits were carried out without extra intentions, many claimed the recent ones were different from those in the past in intensity.

Provincial factories were subject to intensive inspections and audit personnel were dispatched to partner companies.

Samsung is reportedly ready to mete out severe punishment on certain affiliates that committed flagrant violations but failed to correct them even after they were discovered by previous audits. Dozens of executives and workers at an affiliate are known to have been asked to resign.

A sweeping personnel reshuffle is likely as a host of CEOs and executives of Samsung affiliates are expected to resign over the scandal, the first being Samsung Techwin CEO Oh Chang-seok Wednesday.