Samsung Bribery Scandal (2017)

Controversy

Samsung is a technology company that had $174 billion in sales in the past year. Samsung offers a wide range of tech products from digital TVs, monitors, smartphones, printers, tablets, and many other products in a variety of other technology fields. Samsung was founded in 1969 and now has over 300,000 employees in 79 different countries and operates as one of the largest companies in the world.

Lee Jay-yong Vice Charmen of Samsung

In 2014 Lee Jay-yong inherited control of Samsung when his father was incapacitated by a heart attack. Recently Lee was found guilty by a South Korean court of bribery and other corruption charges. Lee's indictment comes at the end of a 90-day investigation by a special prosecutor looking into a corruption scandal that led to the impeachment of former South Korean president Park Gun-hye. Lee was found guilty of giving $38 million in bribes to Choi Soon-sil, a secret confidant of the former president Ms. Park. These bribes allowed Lee to gain government support that helped him to gain more control over Samsung on a merger between two Samsung affiliates. Lee claims that bribes paid to Ms. Choi were donations from Samsung and were coerced. Samsung is accused of making the payments and that by paying Ms. Choi Samsung was able to secure a vote by the government controlled National Pension Service that supported the merger. The special prosector on the case claimed that Ms. Park ordered the pension service to support Lee.

Lee was also also found guilty of perjury, concealing criminal profits, embezzlement, and hiding assets overseas. The prosecution alleged that Lee was a tycoon who knew exactly what he was doing when Samsung paid tens of millions of dollars to entities linked to a confidante of Park to gain the backing of the government on the merger. The merger caused a loss of at least $123 million for the national pension fund due to their large stakes in the two Samsung affiliates; the merger conversely increased the stock of the Lee family by at least $758 million. This scandal has been a blow to Samsung's reputation and they will have to work hard to prove that this was a one time event.

Stakeholders

There were many affected by this scandal, beginning with the major players involved. Samsung's trust as a company has decreased in this scandal and the major parties that were guilty of the crimes have lost their jobs as well as their reputations. The South Korean government has been hurt by this scandal as they have lost at least $123 million and have lost faith in some of their employees. The South Korean people have lost some of their faith in their government's ability to operate truthfully and honestly. South Korea has a newly elected president Moon Jae-in who capitalized on this scandal by running as a "clean" candidate and was able to secure the presidency.

Current South Korean President Moon jae-in

Individualism

According to Friedman's Individualism the only goal of a business is to profit without breaking the law. This means that Samsung's responsibility was to its stockholder's and to increase profit. Someone who follows Individualism would say that this was an unethical act by Lee. By breaking the law Lee acted unethically even if he was trying to make money for the company.
Kantianism

Kantianism has four basic principles that define it. Immanual Kant's principals are to act rationally, allow and help people to make rational decisions, to respect people and their autonomy, and to be motivated by good will. Another piece of Kantianism is the formula of humanity that states you should never treat people at a means to an end, and to not take advantage of people. Were a kantian to look at this case they would find it to be unethical. Lee was not motivated by goodwill when bribing the confidant of the president at the time. Lee failed the test of humanity by using the pension service as a means to getting the merger done. He did not respect the autonomy of the government workers at the pension service by not allowing them to make their own decisions.

Utilitarianism

Former South Korean President Park gun-hye

Utilitarianism by John Mills states that happiness and is the only thing of intrinsic value and that happiness should be maximized in yourself and others. In this case happiness is not maximized because the people who were involved lost their jobs and the only stakeholder that benefited from this scandal was Choi Soon-sil, the confidant of Ms. Park who was given $38 million in bribes. The stockholders of Samsung did not see an increase in the stock due to the actions by Lee so they were not happy as a result. The government of South Korea's happiness was not maximized in this situation because they lost a large sum of money because of the bribery.

Virtue Theory

Virtue Theory involves an act performing its function and focuses on four virtues to determine if an act is ethical or unethical.  The four virtues that are focused on are courage, honesty, temperance, and justice. Samsung failed all of these virtues with the bribing of the confidant related to the president. They were not courageous as they did not stand for what was right, Lee was not honest with the courts and other entities, they did not show temperance because they did not have reasonable expectations, and they were not just because they did not use fair business practices.

References

Bloomberg.com, Bloomberg, www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=91868. 

“FAST-FACTS.” Samsung Global Newsroom, news.samsung.com/global/fast-facts. 

Lee. “Samsung Chief Gets 5-Year Prison Term for Corruption.” CNNMoney, Cable News Network, money.cnn.com/2017/08/25/technology/samsung-verdict-jay-y-lee/index.html.

Reuters, Thomson. “Billionaire Samsung Heir Convicted in Bribery Scandal That Brought down President.” CBCnews, CBC/Radio Canada, 25 Aug. 2017, www.cbc.ca/news/business/jay-lee-samsung-heir-bribery-moon-1.4261831.

Ricker, Thomas. “Samsung Heir Found Guilty of Perjury, Embezzlement, Bribery.” The Verge, The Verge, 25 Aug. 2017, www.theverge.com/2017/8/25/16201360/samsung-lee-jae-yong-guilty.

“Samsung Heir Lee Jae-Yong Is Indicted on Bribery Charges.” BBC News, BBC, 1 Mar. 2017, www.bbc.com/news/world-asia-39112301.

Sang-Hun, Choe. “Claims Against South Korean President: Extortion, Abuse of Power and Bribery.” The New York Times, The New York Times, 8 Dec. 2016, www.nytimes.com/2016/12/08/world/asia/south-korea-park-geun-hye-accusations-impeachment.html.

Sang-hun, Choe. “Samsung's Leader Is Indicted on Bribery Charges.” The New York Times, The New York Times, 28 Feb. 2017, www.nytimes.com/2017/02/28/world/asia/lee-jae-yong-samsung.html.
Stoller, Kristin. “The World's Largest Tech Companies 2017: Apple And Samsung Lead, Facebook Rises.” Forbes, Forbes Magazine, 24 May 2017, www.forbes.com/sites/kristinstoller/2017/05/24/the-worlds-largest-tech-companies-2017-apple-and-samsung-lead-facebook-rises/#274b14b4d140.