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Samsung Board Chairman jailed on union sabotage charge

Bloomberg Seoul | Updated on December 18, 2019 Published on December 18, 2019

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Samsung Electronics Co Board Chairman Lee Sang-hoon was sentenced to 18 months in prison on Tuesday after being found guilty of obstructing the formation of the company’s labour union, according to the Seoul Central District Court.

Lee was charged with leading an operation to sabotage a newly formed labour group at Samsung’s customer-service unit in 2013 when he was chief financial officer. Samsung’s executive vice president Kang Kyung-hoon was also sentenced to 18 months for violating the country’s labour law.

Dozens of current and former employees at Samsung units were also convicted on charges of illegally cracking down on union activities. Some were sentenced to prison while others received suspended jail terms or ordered to pay fines.

“We humbly accept that the companies’ understanding and view toward labour unions in the past fell short of society’s expectations,” Samsung Electronics and Samsung C&T said in a joint statement. “We will endeavour to build a forward-looking and productive labor management relationship based on the respect for our employees.”

Rigorous scrutiny

While the board chairman has limited role in the day-to-day operations of the world’s biggest manufacturer of smartphones and memory chips, the sentencing is another blow to top management at South Korea’s biggest company. Jay Y. Lee, the company’s Vice Cairman and de facto leader, ceded his board seat in October as he fights bribery charges that could land him back in jail.

But the heir apparent is still running the tech giant while on trial and the imprisonment of the chairman may complicate Samsung’s plans to shift more authority to the board. Samsung has yet to announce its annual executive reshuffle that usually takes place in early December.

The Seoul-based company could face more rigorous scrutiny from investment funds focused on environmental, social and corporate governance issues in the wake of the sentencing, according to Bloomberg Intelligence analyst Masahiro Wakasugi.

Published on December 18, 2019
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