Engaged in crisis, Samsung Electronics dismisses any split project

After the fiasco of the Galaxy Note 7 and the corruption scandal that targets its top executives, Samsung Electronics finally dismissed Friday any split project.

There will be none. The world's largest smartphone maker, Samsung Electronics, which emerges from one of the worst sequences in its history, announced on Friday (March 24th) that it was renouncing a split project it had previously mentioned. The South Korean giant has just been confronted with two major crises: the disastrous planetary recall of its Galaxy Note 7, a battery-powered device with the risk of explosion, and then its involvement in the scandal of corruption Which led to the dismissal of South Korean President Park Geun-Hye. Samsung Electronics vice president Lee Jae-Yong, who is the heir to his parent company - the Samsung Group - has been indicted for corruption and is still incarcerated.

After the Galaxy Note 7 fiasco in the fall, Samsung Electronics announced, under pressure from its shareholders calling for improved governance, that it was considering splitting into two entities. But Chairman of the Board Kwon Oh-Hyun announced on Friday at the general meeting of Samsung Electronics that the study of the legal and fiscal aspects of such an operation had made it possible to isolate "certain negative effects" .

Soon a new governance commission

"At this stage, (the split) seems difficult to implement," he said without giving more precision. A new governance commission, which had been promised in the wake of the recall of the Galaxy Note 7, will be put in place by the end of April, he said. But Samsung Electronics has not yet been able to recruit "foreign executives who have the experience of executive leadership of major groups" and who would be likely to enter this commission, he said. Said, "because of the uncertainties about the internal and external environment of the group".

Samsung Electronics is Samsung's flagship. Its action has peaked on the prospect of even higher profits. His vice president Lee Jae-Yong became the in fact the boss of Samsung after his father's heart attack in 2014. The political scandal centers on Choi Soon-Sil, a 40-year-old friend of former Park president, accused To use his influence to draw nearly $ 70 million from various conglomerates and to meddle in the affairs of the State.

Samsung, the largest conglomerate in the country, weighs about one-fifth of South Korean GDP and has been the most generous of Choi Soon-Sil's foundations. The group is accused of paying close to $ 40 million in bribes to the confidante of the former president in exchange for political favors. Samsung was given the go-ahead by the government for the controversial merger of two of its units, Cheil Industries and C & T, in 2015.

This operation, which was crucial for the Group's succession, had been denounced by some shareholders, who believed that C & T had been deliberately undervalued. But the National Pension Fund, a large shareholder of Samsung under the supervision of the Ministry of Social Affairs, had supported it. The former minister of social affairs was charged with abuse of power.