Samsung tightens donation rules after scandal

President Jay Y Lee is accused of pledging 43 bn won in bribes to a company

Tech giant Samsung Electronics is tightening board oversight on donations while two senior Samsung Group 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.

The flagship of South Korea’s top conglomerate Samsung Group has been at the centre 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 organisations backed by President Park Geun-hye’s confidant, Choi Soon-sil, to curry favour.

Though Samsung Group and Lee have denied paying bribes to Park or seeking improper favours, 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 favour. 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.

Samsung also said on Friday it was unable to nominate a new outside director for vote at the March 24 annual shareholder meeting due to uncertain circumstances. The firm had in November promised to nominate at least one new board member with “global C-suite experience” as part of its efforts to improve corporate governance.