Rocked By A Corruption Scandal At Home, Samsung Reaches Out To Silicon Valley
Tuesday evening I'm in the swank surroundings of the Asian Art museum in San Francisco at a private event, listening to a presentation by Samsung Group about its technologies and its business groups. And that it is seeking to connect with Silicon Valley's influencers.
Samsung's executives said they wanted to take part in the conversations in Silicon Valley because the people here help shape the future.
[I offered to publish some columns from Samsung executives, and other ways to get involved in local conversations--but it wasn't clear which specific topics of conversation it wants to join.]
Samsung's outreach to Silicon Valley comes at a very bad time. Here is the New York Times, Dec 4:
This scandal is unlike any Samsung has faced because it involves a whistle-blower, a rare species in South Korea.
Over the last month, Kim Yong-chul, Samsung’s former chief in-house lawyer and a prosecutor before that, has contended that Samsung stashed away a gigantic slush fund. He said it was created with company money, hidden in dummy stock and bank accounts in the names of executives, including his own, and used to bribe politicians, prosecutors and journalists, and even to finance an art collection for the chairman’s family.
Tired of Corruption but Afraid of the Crackdown - New York Times
Samsung is a $160bn revenue company. It alone, accounts for 15% of South Korea's GDP. Which means it won't go the way of Enron and disappear.
But it does have its hands full right now, and it is trying to reassure its shareholders, especially foreign investors, that the scandal won't affect the management of its huge business groups.
It is easy to see why investors would be concerned. In an article in today's The Korea Herald:
Possibly related to the alleged discovery of secret accounts for stashing slush funds, the Seoul prosecution prohibited 10 more executives of Samsung subsidiaries from leaving the country; this in addition to the earlier overseas travel ban on 15 Samsung officials.
I've met senior Samsung executives many times and I've always been impressed. They are in many tough businesses and have been able to stay ahead and do it consistently. This means having to meet very tight product cycles, some as short as six months, plus there is new competition coming from China and elsewhere. A distracted management would be very risky to the company.
Samsung's event at the Asian Art museum could be seen as a way to show that its management isn't distracted, and that it is focused on its business and its future through closer ties with Silicon Valley. Over the next few months it'll be interesting to see what that means.
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