Bowing Out

2 minute read
Michael Schuman

Tycoons in South Korea have always been more than just rich people. Inside their sprawling conglomerates, they are revered like demigods, their every utterance heeded as law. In the country at large, these titans of industry, though often distrusted, are lauded as the men who transformed an impoverished backwater into a modern nation with the world’s 13th largest economy. This week, however, one of the most powerful fell from his pedestal. Lee Kun Hee, 66, the chairman of Samsung Electronics, shocked South Korea by resigning after being indicted for tax evasion and breach of trust.

Under Lee’s guidance, Samsung roared to the forefront of the global electronics industry as one of the world’s largest makers of LCD panels, microchips and mobile phones. Yet amid this high technology, Lee increasingly appeared an anachronism, a throwback to an earlier age when a few dominant personalities managed Korea’s economic miracle. A shadowy figure rarely seen in public, Lee wielded tremendous authority within Samsung Group, a conglomerate with $150 billion in annual revenue. But foreign investors came to see him as an impediment to the reform needed to transform Samsung from a family-dominated fiefdom into a professionally managed corporation responsible to its shareholders.

Lee’s departure (his top lieutenant, wife, and son and heir apparent also resigned positions at Samsung) may finally allow that process to begin — and could set a precedent throughout Asia, where family-run companies have long resisted transparency and greater accountability. As a major shareholder, Lee may continue to influence Samsung. But his decision to resign, even before a trial, for the greater good of the company he ran is an unprecedented act in South Korea and is an example that business leaders throughout Asia may find hard to ignore. When Lee announced he was stepping down in a televised speech, he told South Koreans he was “taking all the mistakes of the past with me.” His decision may mark the end of an era for an Asian style of capitalism that has outlived its usefulness.

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