Samsung Electronics tightens donation rules; report says two group executives offer to quit

Fri Feb 24, 2017 2:58am EST
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By Se Young Lee

SEOUL (Reuters) - Tech giant Samsung Electronics (005930.KS: Quote) is tightening board oversight on donations while two senior Samsung Group [SAGR.UL] executives reportedly offered to resign, as the conglomerate struggles with the fallout from a graft scandal that led to its leader's arrest.

Samsung Electronics said on Friday its board of directors will now vote on any financial support to third parties worth 1 billion won ($886,210.56) or more and disclose any such payments publicly. Previously, only payments of 680 billion won or more were subject to board approval.

"This move improves transparency in financial aid and appropriation of social corporate social responsibility funds, and strengthens compliance management," the company said in a statement.

The flagship of South Korea's top conglomerate Samsung Group has been at the center of an influence-peddling scandal that led South Korea's parliament to impeach President Park Geun-hye in December.

Jay Y. Lee, leader of Samsung Group and Samsung Electronics' vice chairman, was arrested last week after being named a suspect by the South Korean special prosecutor's office. Lee is accused of pledging 43 billion won in bribes to a company and organizations backed by President Park Geun-hye's confidant, Choi Soon-sil, to curry favor.

Though Samsung Group and Lee have denied paying bribes to Park or seeking improper favors, the conglomerate has pledged to take steps to improve transparency amid accusations and criticisms that Samsung used its financial might to game the system in its favor.

Lee, who is arguing that he was coerced into making the payments, told lawmakers during a December hearing that Samsung Group would take measures to avoid making improper payments in the future.

"It appears that the things that Vice Chairman Lee promised to do are being carried out now," said Park Ju-gun, head of corporate analysis firm CEO Score.   Continued...

A building of Samsung Electronics (R) is seen in Seoul, South Korea, November 8, 2016.  REUTERS/Kim Hong-Ji