Power play at Samsung could be in the works

As Samsung works during 2015 to rebound from the 2014 dip induced by less than stellar interest in the Galaxy S5 and other mobile devices, the heir apparent to the company’s controlling family is dealing with a new challenge. Recently Paul Elliott Singer staked out a 7.12 percent claim in Samsung C&T, a construction subsidiary of the tech giant. That might not seem like much of a stake, but it is enough to signal an interest in management participation and comes at the same time that Lee Jae Young is trying to consolidate the Lee family’s control over the company.

Singer’s investment in the Samsung subsidiary may not be enough to trigger any actual changes in how the company is run, but it may be enough to force Lee to be more forthcoming about decisions regarding the company. The move is enough to prompt one analyst, Heo Pil Seok with Midas International Asset Management, to describe it as a declaration of “war.” Already Lee’s move to also buy up shares of Samsung C&T has rankled other investors who say the move to consolidate power comes at their expense.

Singer’s move will put Lee in an unusual position. He has tried to portray himself as part of a new generation of business leaders in Korea who are more open-minded, more transparent and who do not use the old methods of the ruling families, or chaebol. However, to rebuff Singer, Lee may have to resort to the same strategies that the old guard has used for years.

Lurking behind the scenes of this latest drama are questions about Lee’s ascension to the helm of Samsung. He has been controlling the family’s hold on Samsung since patriarch Lee Kun Hee suffered a heart attack in May 2014. However, no move has been made to officially change the guard which has led to questions about why there would be a delay. How Lee handles this challenge from Singer may impact how that matter proceeds.

In the meantime, investors and industry analysts will continue to watch Singer to see whether he can rattle the chaebol and their impact on Korea’s economy. Many think that domination by only a few families is stifling innovation, job and wage growth in the country.

source: Bloomberg

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