Samsung reveals executive reshuffle as corruption scandal continues

Analysts, however, see the move as little more than a stop-gap measure.
Written by Charlie Osborne, Contributing Writer
CNET/CBS Interactive

Samsung has named a new mobile marketing chief and a new head of the China division in an executive reshuffle after the arrest of vice chairman Jay Y. Lee.

As reported by Reuters, executive vice president Choi Kyung-sik is now leading the mobile division's marketing office, while the post's predecessor, Lee Sang-chul, has been shifted to southeast Asia operations.

Kwon Kye-hyun, once a Samsung head of security and diplomatic affairs, has also been named as the new chief of Samsung's China unit. Changes are due to be made in one of Samsung's most successful divisions, the semiconductor arena, but these are yet to be announced.

Samsung usually waits until the end of the year to announce shifts in executive positions, but as last December was a chaotic time for the company, there has been a delay.

The Seoul, South Korea-based company has been under investigation by Korean authorities relating to claims of embezzlement, political corruption, and bribery. Earlier this year Lee, Samsung Group's head and vice chairman was arrested on charges of embezzlement and bribery, alongside other Samsung executives.

In total, 30 government officials and senior company executives have been indicted and 13 arrests at Samsung were made, including Lee, Samsung Group President Chang Choong-ki, and vice chairman and head of the Future Strategy Office Choi Gee-sung.

At the end of a 90-day investigation, Korean law enforcement concluded that Lee "ordered or paid" over $30 million in bribes to a close friend of former South Korean President Park Guen-hye, who was impeached over claims she abused her power.

Now replaced by Moon Jae-in, Guen-hye is currently awaiting trial in detention.

Lee, as well as Samsung as a whole, has denied any wrongdoing, but as the executive and others remain locked away, Samsung has been left with a thin team at the top to keep the company going in a competitive, fast-paced market.

In a statement, the tech giant said it "decided to execute on these appointments in the belief that the organizational metabolism would decline if we delay them any further," and showing at least some signs of trying to reorganize the upper echelons of the company will "minimize uncertainties."

However, as noted by Reuters, analysts have accepted the news as little more than a "stop-gap measure" designed to keep the company afloat, rather than as a long-term solution to drive Samsung forward in success and profit.

It may not be that any of these personnel changes will be permanent at least until the vice chairman has been released from detention. However, as pressure mounts in China amid stiff competition from local companies including Huawei and Vivo, changes have to be made to try and keep ahead of the curve.

Despite Samsung posting a record Q1 profit thanks to its semiconductor unit, the outlook in China is looking bleak.

According to Counterpoint, smartphone sales decreased in China by around 60 percent in the first quarter of the year, which roughly equates to a marketshare of only 3.3 percent. The position may only be a short-term fix, but perhaps the new head of the unit can set to work in clawing back some of the firm's slice of the pie.

The best laptops for travel in 2017

Editorial standards