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Samsung's heir apparent appointed to board member after Note 7 crisis

(Xinhua)    17:02, October 27, 2016

SEOUL, Oct. 27 -- Samsung Electronics Vice Chairman Lee Jae-yong, an heir apparent of the biggest South Korean company, was appointed on Thursday to board of directors after a fiasco of its flagship Galaxy Note 7 smartphone dented the company's third-quarter earnings.

Samsung shareholders voted in favor of the appointment of Lee, the grandson of the group founder Lee Byung-chull, to a board member at an extraordinary meeting held for the first time in 28 years.

The younger Lee is known to have actually managed the country's largest family-run conglomerate after his father Lee Kun-hee, 74, chairman of Samsung Electronics, was hospitalized in 2014 for a heart attack.

The 48-year-old vice chairman got to hold a legally responsible position, becoming the first founding family member as a registered director in eight and a half years since Chairman Lee resigned in April 2008 from the board for probe into his alleged tax evasion and other irregularities.

The registration heralded a new leadership in Samsung Electronics along with three chief executives in the components, appliances and mobile devices divisions who were already registered as board members.

The Samsung scion is facing an urgent task to overcome the company's biggest crisis ever that was triggered by scores of reports about Galaxy Note 7 smartphones heating up and catching fire.

Two weeks after its global debut, Samsung was forced on Sept. 2 to make a global recall of about 2.5 million Note 7 phones as owners of the fire-prone devices reported fire cases.

Samsung decided earlier this month to permanently end production and sales of the gadget as even replacement phones were found to have caught on fire.

The Note 7 crisis is estimated to cost Samsung about 7.1 trillion won (6.2 billion U.S. dollars), including 3.5 trillion won in opportunity costs, 2.6 trillion won in direct costs and 1 trillion won in losses from the initial global recall.

The younger Lee is also required to overcome doubts among the general public about his management capability and the way of his accession to a top position of the group, sometimes called Samsung republic or empire.

Many South Koreans tended to sense that Lee is destined for an emperor of Samsung as he was born as an only son of Lee Kun-hee, while wondering whether he has ever shown any eligibility for the group management.

Civic group activists have raised questions about the succession of management control from Lee Kun-hee to the heir apparent, which is suspected of inadequately paying inheritance taxes.

Demand for transparent corporate governance is a task which the younger Lee should face. The founding family has controlled Samsung Group with only a minority share through a web of cross-shareholdings between affiliates.

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Web editor: Du Mingming, Bianji)

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