Twenty Billion Won Compensation to Samsung Electronics

Five former and present directors of Samsung Electronics, including Chairman Lee Kun-hee and general management-supporting president Choi Do-suk, compensated 20 billion won to the company.

Samsung announced on Sunday that the five former and present directors: Chairman Lee, President Choi, former chairman Kim Kwang-ho and former presidents Jin Dae-jae, Lee Hae-min and Mun Byung-dae would pay the 20 billion won ordered in the second judgment of the shareholders’ representative suit in November last year. They had paid the compensatory money to Samsung Electronics dividedly in December and in this month.

According to economic reform center of the People’s Solidarity for Participatory Democracy, Chairman Lee’s share was eight billion won and the remaining five directors shared the 12 billion won. President Choi managed to prepare cash equivalent of three billion won by exercising three stock options on his 15,000 Samsung Electronics stocks since last year.

Samsung Group however explained, “We are not giving into the second judgment and are instead processing with an appeal to the Supreme Court,” adding, “We will be able to receive the compensatory money paid when we win the appeal.” Samsung also stated, “If we lose the final appeal, we would have to pay an additional 20 percent interest on the 20 billion compensation money from the second judgment date,” and that “The reason for paying the compensation in advance was to avoid the possibility of paying the high interests.”

The shareholders’ representative suit was instituted by the People’s Solidarity for Participatory Democracy in 1998 for the reason that the former and present directors have caused enormous losses to the company for bribing former president Roh Tae-woo, acquisition of delinquent companies and wrongful support to subsidiaries. The second judgment was made last year for Chairman Lee to pay seven billion won for bribing former president Roh and for 12 billion won paid by the board of directors for the under priced sale of Samsung General Chemical Co. The 20 billion compensations made by the board of directors also include the 1 billion interest expenses. Currently, the People’s Solidarity for Participatory Democracy have also made an appeal to the Supreme Court.

Tae-Han Kim freewill@donga.com