Samsung apologises to shareholders over bribery scandal, recall of Note7

Samsung Vice-Chairman Kwon Oh Hyun speaks during the company's annual general meeting at the company's Seocho office building in Seoul, South Korea, on Friday, March 24, 2017. PHOTO: BLOOMBERG

A customer uses his Samsung Electronics' Galaxy Note7 as he waits for an exchange at the company's headquarters in Seoul, South Korea, Oct 13, 2016.
PHOTO: REUTERS

Updated

Published

Mar 24, 2017, 02:53 PM

SEOUL (BLOOMBERG) - Samsung Electronics apologised on Friday (March 24) for its involvement in scandals that have led to the ouster of South Korea's president and the recall of its Note7 smartphones, pledging to improve governance in the face of pressure from investors.

Vice-chairman Kwon Oh Hyun delivered the apology at the smartphone maker's annual shareholder meeting in Seoul.

Lee Jay Yong, heir apparent at the smartphone giant, was absent as he remains in detention, facing charges including bribery and embezzlement.

Prosecutors accuse Lee of bribing a confidante of former President Park Geun Hye in return for the government backing of a 2015 merger that helped him tighten control over the South Korean technology giant.

Samsung denies Lee did anything wrong and said court proceedings would reveal the truth.

The fire-prone Note7 was eventually killed off, with the debacle over its batteries estimated to cost the company about US$6 billion (S$8.4 billion).

"I'm sorry for the scandal," Mr Kwon said, maintaining that the company did not pay bribes in the form of donations.

"I apologise once again for the mistake with the Note7 last year. It was a failure that arose from trying new technology."

Mr Kwon said the company is not considering a stock split and any move towards a holding company "doesn't look easy" at this time.

The company is reviewing its options and looking at areas including legal and tax.

Samsung shares fell 1 per cent to 2.068 million won (S$2,580) in Seoul. The stock reached a record high this month on the back of robust semiconductor sales and the potential for a restructuring of the technology giant.

Samsung said in November it was reviewing the idea of splitting into holding and operational companies, seeking to address investor concerns about its corporate governance structure.

Lee's trial in Seoul's Central District Court began on March 9 with the next hearing planned at the end of the month.

The trial overshadows the unveiling of Samsung's flagship S8 smartphone next week that the company hopes will revitalise its mobile business after the recall of the Note7 last year.