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Samsung embroiled in South Korean political scandal

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Image: Samsung

9 November 2016

South Korean investigators on Tuesday raided the offices of Samsung Electronics, as part of a probe into alleged political corruption at the highest levels of that country’s government.

The administration of President Park Guen-hye – who is South Korea’s first female president, and the daughter of former President Park Chung-hee – has been rocked by allegations of influence peddling centered on a mysterious figure said to have influenced policy decisions in exchange for cash.

Choi Soon-Sil, herself the daughter of cult leader Choi Tae-min, has been accused in local media reports of accepting almost $3.1 million for her daughter’s horseback riding lessons from a corporate donor.

Choi’s strange relationship with President Park is at the heart of the scandal, which has been dominating South Korean politics for weeks. Local media describe a Svengali-like dynamic between Choi – whose father was said to have major influence over Park’s father – and the president. The scandal broke in earnest when Park’s speeches were discovered on a tablet computer belonging to Choi, suggesting that Choi – who has no government or public policy experience – was editing Park’s speeches.

Park’s approval ratings have nose-dived to 5% as a result, according to Gallup, and she has taken the unprecedented step of allowing Parliament to select her next Prime Minister. Large-scale street protests in Seoul have called for her resignation.

The raid is the latest piece of bad news for Samsung in a month already brimming with them – the extensive debacle around the exploding Galaxy Note7s has severely damaged the company’s reputation, and a recall of Samsung-built washing machines has added insult to injury.

Nor is it the first time that Samsung’s offices have been raided by South Korean authorities, as an article from Bloomberg points out – the company found itself under the microscope in 2008 as the appointment of a new head of several business units (Jay Y. Lee, coincidentally now the head of the unit in charge of the Note7) was done legally.

Contrition
In oterh Samsung news, the company made an effort to show full contrition for the Note7 debacle by taking out a full-page ad in three newspapers to apologise.

The ad appeared in the New York Times, the Wall Street Journal, and the Washington Post. The letter is attributed to Gregory Lee, the president and CEO of Samsung Electronics North America.

In the ad, Lee says the company will do everything it can to make amends and find out why the phone shipped with such a dangerous flaw: “An important tenet of our mission is to offer best-in-class safety and quality. Recently, we fell short on this promise. For this we are truly sorry. We will re-examine every aspect of the device, including all hardware, software, manufacturing and the overall battery structure. We will move as quickly as possible, but will take the time needed to get the right answers.”

In October Samsung killed off the Note7 and asked all customers to return their device for reimbursement. The letter also references the recent recall of Samsung top-loading washing machines.

With two major recalls in one year, Samsung clearly feels the need to try and win back consumer trust.

“Most importantly, safety remains our top priority,” the ad says. “We are grateful for your ongoing support and again, we are truly sorry.”

Full-page ads are quite the revenue stream for the newspaper industry. Recently Slack took out a snarky full-page ad when Microsoft launched its competitor, Microsoft Teams.

Samsung is already looking ahead to the Galaxy S8, this week confirming that it will include an artificial intelligence powered digital assistant. It has us thinking that Samsung may double down on its previous strategy of pushing consumers into its own services and overpowering the phone with software choices. In the era where a Google-powered Pixel is on the shelf, it’s a tenuous strategy.

IDG News Service

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