Scandal shakes Samsung

April 11, 2008 8:27:17 AM PDT
The powerful tycoon who runs South Korea's biggest business empire said Friday that the corruption scandal shaking the conglomerate could lead to a major change in leadership, and possibly his own resignation. Samsung Chairman Lee Kun-hee emerged from a second round of extensive questioning over allegations of bribery and other shady dealings at the company.

"I will deeply think about reshuffling the corporate management structure and the management lineup, including myself," Lee haltingly told reporters.

Pressed if that meant he would resign, Lee said he "will think about it."

The government sanctioned investigation began in January, spurred by allegations from a top Samsung attorney who had left the company.

Kim Yong-chul claimed that the conglomerate had a $205 million slush fund used to bribe prosecutors and judges. He also alleged that Lee's wife, who heads a Samsung art museum, used some of the money to buy expensive paintings from abroad.

Samsung Group immediately denied the allegations.

Lee, one of the nation's most influential executives, said he assumed blame for the scandal and would "take full responsibility, either morally or legally."

Samsung said afterward that Lee's statements were provisional and depended on whether investigation uncovers any wrongdoing. "His comment does not mean that the chairman himself or top management will step down," the group said in a statement.

"Rather it means that if the special prosecution concludes that there are problems, we will make necessary improvements."

Prosecutors, who have raided Samsung offices and questioned top executives as well as Lee's family, have until April 23 to conclude the probe.

Samsung is the parent to dozens of businesses, including Samsung Electronics Co., a world leader in computer memory chips, flat screen televisions and mobile phones.

Founded by Lee's father 70 years ago, the conglomerate also has interests in shipbuilding, insurance and apparel, among other industries. Samsung's construction arm is erecting in Dubai what it touts as the world's tallest skyscraper.

Lee, who took over the company two decades ago, is credited with making Samsung Electronics a top global brand by transforming its corporate culture to focus on quality.

For years Samsung has fought allegations that it has used dubious financial transactions to ensure that control of the conglomerate passes from Lee to his son - allegations the independent counsel is also examining.

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Associated Press writers Hyung-jin Kim and Jae-hyun Jeong contributed to this report.

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