London Korean Links

Covering things Korean in London and beyond since 2006

Samsung – am I missing something?

I’m puzzled by this item on the KBS site today

Samsung to Pay W1 Tln in Inheritance Tax

The Samsung Group will follow the example of the Shinsegae Group in paying a trillion won in inheritance tax.

A Samsung source said Tuesday that Samsung will pay at an appropriate time around a trillion won in inheritance tax associated with the transfer of the group’s managerial rights to the chairman’s son, Lee Jae-yong.

Dismissing civic groups that said the group illegally transferred the rights, the source said no inheritance procedures have been carried out yet.

The People’s Solidarity for Participatory Democracy said the transfer of shares and the inheritance of managerial rights are separate issues from paying taxes under law.

My past experience with KBS is that it’s dangerous drawing ANY conclusions from their news items, but a literal interpretation of the article would imply the following:

  1. Samsung have handed over power to the boss’s son. Dubious practice, but I guess the Murdochs do it and the Maxwells did it.
  2. The transfer of power is deemed to be a taxable event. “Managerial rights” have value? Surely if the management position carries a pay packet consistent with the work done then managerial rights have little value. I guess the conclusion is: this job has an astronomical pay packet and involves little more than playing a round of golf when the guy feels up to it.
  3. The company agrees to pay the ($1 billion) tax bill on behalf of the boss. Er — pardon?

Is this Samsung the world-beating technology company (if so, sell all your shares in Korea Inc NOW), or is it some other Samsung, a tin-pot fiefdom controlled by an idle family dynasty? Is this bad reporting by KBS, or is this the standard of governance expected in Korean companies?

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