March 24, 2010 / 12:16 AM / 9 years ago

Samsung's Lee returns as chairman to boost growth

SEOUL (Reuters) - The man in charge of South Korea’s top business group, his legal scandals behind him, returned to head its flagship Samsung Electronics as it battles deepening competition and hunts for new ways to grow.

Former Samsung Group chairman Lee Kun-hee arrives for his trial at a Seoul court in this July 16, 2008 file photo. Lee will return to a management role as the chairman of Samsung Electronics, South Korea's biggest company, several media outlets reported on March 24, 2010. Picture taken July 16, 2008. REUTERS/Lee Jae-Won/Files

Lee Kun-hee, 68, who led the Samsung Group into a multi-industry conglomerate and Asia’s top technology powerhouse, left the management two years ago after being indicted over financial irregularities at the group, founded by his father.

Expectations for his return have been growing since he was granted a presidential pardon in December and started discussing a possible return to management at rare public events.

However, some analysts said his return was earlier than expected.

While the reclusive Lee is believed to have retained influence over the group as the head of the founding family, his return with an official title — chairman of Samsung Electronics as of Wednesday — will give the conglomerate clearer direction and stability, analysts said.

“Lee’s return removes what had been an uncertainty for Samsung Group,” said Park Yun-chae, research head at Kiwoom Securities.

“Under the ownership management, founding family member offers long-term visions that are critical to the group’s direction ... he is expected to help Samsung find its long-term goals and plans.”

Lee expressed concerns over Samsung’s future to group executives who requested his return, Samsung Group said in a statement.

“We’re seeing a real crisis right now. Top global companies are falling under. We never know what will happen to Samsung,” Lee said.

“After a decade, most of the products and businesses that represent Samsung today will be gone. There’s no time to waste. Let’s go forward, only forward.”

Samsung Electronics has recovered strongly from a global economic crisis in late 2008 and is leading Japanese rivals such as Sony Corp and Panasonic that it once emulated, in areas of TVs, memory chips and mobile phones.

South Korea’s biggest company and the world’s biggest memory chip and TV maker last year overtook Hewlett-Packard Co as the biggest global electronics firm by sales, with revenue of $121 billion.

By 0232 GMT, Samsung Electronics shares were up 1.2 percent, compared with the wider Seoul market’s 0.3 percent gain.


But Lee’s return also raised concerns over transparency.

“This sort of decision shows that Samsung is very closed off to outside opinion on how the company should be run...its decisions are being made by a very small group of people encased in its thick walls,” said Kim Sang-jo, Associate Professor of Economics at Hansung University.

Kim is also an executive at Solidarity for Economic Reform which is frequent critic of the country’s family-owned conglomerates.

Lee, one of the country’s richest and most influential businessmen, stepped down from his chairmanship in April 2008 after being embroiled in a scandal in which group executives were indicted on suspicion of brokering a deal that would give Lee’s children a greater stake in the ownership of Samsung Group.

He was cleared of the charge but handed a suspended three-year jail term for tax evasion.

South Korea pardoned him late in December so he could be reinstated as an International Olympic Committee member to help the country’s bid for the 2018 Winter Games.

In February, Lee told reporters at a group ceremony he was “thinking about” returning to management and would do so if Samsung weakened and needed help.

At the event, Lee’s latest public appearance in South Korea, he walked with assistance and spoke in a barely audible voice as he praised management philosophy of his late father, who founded Samsung Group.

With the chairman title, Lee is expected to focus on drafting long-term blue prints for Samsung Group and its flagship Samsung Electronics, Samsung officials said.

Facing fierce competition in key businesses such as chips and TVs, Samsung Electronics is trying to cultivate new revenue sources in businesses such as health, environment and renewable energy.

Samsung Electronics said Lee’s appointment as chairman will have no impact on the role of its current CEO, Choi Gee-sung, and chief operating officer, Jay Y. Lee, Lee’s only son who was promoted to the position in December.

Additional reporting by Lee Chang-ho, Jungyoun Park and Christine Kim; Editing by Jonathan Thatcher and Anshuman Daga

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