Published: Wed 1st February 2017
Read Time: 2 minutes
South Korean Impeachment: Impact on Samsung
What Happened to the President of South Korea?
On 9th December 2016, South Korean President Park Geun-Hye was impeached after she was accused of extortion, abuse of power and bribery. More specifically, she was accused of allowing her friend Choi Soon-sil, the late leader of a religious cult and spiritual adviser to the Park family, access to classified information. Not only did Choi have access to classified material, she also reportedly edited Park's speeches, received her planned overseas journeys in advance, and even told the President how to dress.
What Does This Have to do with Samsung?
Samsung’s Vice Chairman Lee Jae-Yong is being questioned for bribery, after the impeachment of President Park Geun-Hye in December 2016. Samsung, along with South Korea’s largest firms: Lotte and SK, gave 43 billion Korean Won (approximately £30 million) to Park’s close friend Choi Soon-Sil’s non-profit organisation. This organisation subsequently used the funds for many personal expenses, such as purchasing a £700,000 horse for Choi’s daughter, Jung Yura. However, Lee has claimed that he was not aware the money was used to buy a £700,000 horse, and he has also denied that Samsung tried to win favours through the funds.
What Does This Mean for Samsung in the Future?
It is clearly not a good time for Samsung. Only around 2 months ago, Samsung’s flagship Galaxy Note 7 phone had explosions across the world – resulting in many of its customers switching to competitors such as Apple. Samsung consequently saw their profit levels drop by 30%, to their lowest level in two years. This scandal is undoubtedly not going to help Samsung. Their reputation will be negatively affected and they are likely to further lose a significant percentage of their loyal customers and shareholders.