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Archive for February 25th, 2020

Samsung is deploying a new set of ploys to circumvent even the basic legal and fiduciary obligations to provide for worker safety and corporate governance.

Samsung found itself facing a barrage of public criticism in 2017 when the scion of its founding family, Lee Jae-yong, also known as Jay Y. Lee outside the country, was arrested for embezzlement and bribery.  However, for South Korea’s largest conglomerate, the dust began to settle when Jay had his sentence waived in Feb. 2018 and one of his company men landed in jail after claiming sole  responsibility for years of union-busting in Dec. 2019.  There has since been a shift in attitude and policy.  And three recent developments reveal Samsung’s efforts to undo the improvements it had to made because of public pressure.

Compliance Commission: Bogus or Sinecure?  

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Chung June-young: a judge or a deal maker?

In Dec. 2019-Jan. 2020, appellant-court judge Chung June-young said he would factor it in his ruling and sentencing for Jay if Samsung strengthened its compliance system to the point of “being feared by its own leader.”

Samsung fondly and promptly responded to what appears to be the worst offer by a judge in the country’s legal history—it said it would form a Compliance Commission composed entirely of outsiders.  The commission is chaired by Kim Ji-hyung, retired Supreme Court judge, who arbitrated the settlement between Samsung and SHARPS in 2018.  However, the commission does not seem to have authority to monitor compliance across the Samsung corporate empire of about 63 affiliates that sells almost everything from automobile insurance to smartphones.

Samsung offers little explanation as to why it needs an ad hoc structure given pre-existing compliance officers in-house and an audit committee formed by the board of directors—unless otherwise it needs to woo the judge and assuage public opinion to secure leniency for Jay.  Whether the commission can trump these already existing compliance structures remains unanswered, as the scope of its authority is has not disclosed.  As of this posting, the commission’s website at samsungcompliance.com remains offline.

Judge Chung overreached his authority in making the offer. On Feb. 24, 2019, prosecutors filed a preemptive challenge in a move to remove Chung from the case.

New Chairman:  Outsider or Insider?

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Bahk Jae-wan, the inside man

On Feb. 21, 2020, Samsung Electronics named outsider and former finance minister, Bahk Jae-wan as board chairman, filling the vacancy left by an executive chairman, now in jail for union-busting activities.  The appointment was a superficial move by Samsung to paint its board as more publicly accountable.

Even a cursory look at Bahk’s bio betrays Samsung’s ploy.  He is not an outsider, but an insider deeply involved in the inner circles of bureaucrats nurtured by Samsung.  In 2010, as labor minister, Bahk publicly denied “statistical relatedness” between Samsung’s blood-disorder cluster and working conditions.  Only two years later, a government probe of Samsung lab plants confirmed that the disease-cluster was work-related.

After retirement from politics in 2014, he returned to his on-and-off job as professor at Sungkyunkwan, the university owned and controlled by a Samsung foundation.  As a financial and labor bureaucrat and as a professor, Bahk frequently curried favor with Samsung in the form of free rounds of golf, meals, and even job references for his associates, according to an expose in April 2018 by independent news collective Newstapa.

Trade Secrets vs. Workers Safety

On Feb. 20, 2020, the Seoul administrative court ruled in favor of Samsung Electronics Co., Ltd, allowing it to withhold certain information with respect to the chemicals used in chip production.

By law, the company is required to biannually enumerate the exposure levels of about 190 hazardous chemicals to the government.  In 2018, the civic court ordered the government to fully release such information for Samsung’s LCD factories, despite the company’s fierce opposition.

Samsung brought the case to the administrative court, which ignored judicial precedent and sided with the tech behemoth, which alleged that its rivals can use any such full disclosure to “deduce” trade secrets related to chip production.  SHARPS has campaigned for disclosures of hazardous chemicals because they can be used as evidence for workers compensation petitions for Samsung’s blood-disorder cluster victims.

The advocacy group appealed the decision.

The latest ruling is in tune with a revised trade secret law that took effect on Feb. 21.  The amendment exempts companies from the disclosure of information on hazardous materials should they prove it as core national technology. It does not spell out what constitutes “a core national technology,” but empowers them to lodge criminal complaints and seek punitive damages for any such disclosure.

In a press conference held jointly by SHARPS on Feb 24, 2020, fourteen lawmakers said they would undo the amendment as soon as they can.  “Unknown to us, controversial clauses were deeply hidden in the amendment” said the lawmakers in a statement.  “We repent our negligence in the legislation and take responsibility.”

SHARPS will also petition the Constitutional Court to determine the constitutionality of the amendment.

 

 

 

 

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