Samsung Electronics pledged to adopt a "corporate governance structure disclosure system" designed by the Korea Exchange and launched in early 2017 in a likely effort to become more transparent as a whole, the Korea Exchange said on Thursday, adding that the Seoul-based original equipment manufacturer (OEM) will publicize its first report as part of the new system in late September. The self-evaluation solution is meant to help companies ensure that they're employing the best possible corporate governance practices and transparently report their efforts on this front to the general public. In a case that they fail to do so, the system mandates that its participants explain why they didn't adopt some recommended practices and opted for others.
The platform itself is voluntary in nature, though it's expected to be adopted by more South Korean companies in the near future, especially after winning support from the largest firm in the Far Eastern country. Apart from tech giants, the system is currently also said to be considered by financial holding companies and should become more widespread come next year, consequently clarifying on the often unclear corporate governance structure of Korean businesses, the Korea Exchange believes.
The news of Samsung Electronics pledging to adopt the new solution came shortly before Samsung Group Vice Chairman Jay. Y. Lee was sentenced to five years in prison for bribery, embezzlement of corporate funds, hiding assets overseas, concealing illegal profits, and perjury. Mr. Lee is still denying any wrongdoing, with his legal representatives stating that they'll appeal the verdict given by the Seoul Central District Court. Accountability was one of the main points of contention during Mr. Lee's initial trial, with his attorneys not denying that Samsung paid sums to certain organizations connected to the now-impeached President Park, but stating that the de facto leader of the company had no knowledge of those transactions. In light of these developments, Samsung's willingness to adopt a more transparent corporate governance reporting system signals that the firm is looking to introduce some major changes to its day-to-day operations, even though Mr. Lee's trial wasn't put in correlation with the company's latest move in any official capacity.