Samsung has been ensnared in South Korea’s corruption scandal which has already led to the arrest of its heir apparent Lee Jae-yong on bribery charges. Lee allegedly paid bribes under the guise of corporate social responsibility grants of more than $35 million to win the government’s support for a controversial 2015 merger between two of its affiliates that allowed the founding Lee family to extend its grip on the business empire. Samsung Electronics today announced that it’s introducing a series of measures to bring greater accountability and transparency in managing financial donations and monetary support for corporate social responsibility activities and funds.
Samsung has decided that all financial donations and CSR function that amounts to more than 1 billion won will now require approval from the company’s board of directors. Previously, Samsung Electronics only required board approval for endowments that were more than 0.5 percent of the company’s shareholder equity.
It’s now going to use the electronic disclosure system operated by the Financial Supervisory Service to disclose details of the financial donations and CSR funding. All related details will be made available in quarterly business reports as well as in the annual sustainability report.
Samsung Electronics has also established a Review Council to improve the preliminary review process. It will be comprised of head executives of legal, financial, human resources and communication departments. The council will meet once a week to review proposed projects. Any and all financial donations or CSR funding amounting to more than 10 million won will be reviewed and will only be transferred to the next process if approved by the Review Council.
The company has also decided to review the operation of approval financial donations and CSR funding every quarter not only by the Review Council and the management but also the audit committee of the board of directors. This review will be conducted solely by outside directors which will help in improving transparency related to the executive of financial donations and CSR funding.
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