South Korea's biggest conglomerate Samsung Group has come under fresh criticism about its ownership structure, with the country's antitrust chief saying it was unsustainable.
Korea Fair Trade Commission chief Kim Sang-jo took aim at the group's circular shareholdings between companies such as Samsung C&T, Samsung Life Insurance, and Samsung Electronics.
The structure has enabled the family of Samsung heir Jay Y. Lee to retain control of the companies in the conglomerate, especially crown jewel Samsung Electronics, with minimum investments, critics have said.
"The clear fact is, the current ownership and control structure of Samsung Group, which goes from Vice Chairman Jay Y. Lee to Samsung C&T to Samsung Life Insurance to Samsung Electronics, is not sustainable," Kim told reporters on the sidelines of a meeting with business leaders.
Samsung Group's complex ownership structure has come for criticism earlier too, most notably from US activist hedge fund Elliott Management, which proposed as a solution in 2016 that Samsung Electronics split itself into two.
Samsung Electronics rejected that proposal but accepted part of the fund's proposals by announcing plans to cancel its existing treasury shares worth over US$35 billion by 2018.
Fair Trade Commission's Kim said he urges Jay Y. Lee to make a decision concerning the ownership structure, adding that Samsung Electronics Vice Chairman Yoon Boo-keun, who attended the meeting, had told him it will be considered.
A Samsung Electronics spokesman did not have an immediate comment.
Others have also questioned the group's ownership structure recently.
The country's top financial regulator said on Wednesday that Samsung Life Insurance must consider ways to lessen the risk of having too much of its assets concentrated in one place, including selling some or all of Samsung Life's stake in Samsung Electronics.
"Lessening the risk of concentrated assets is key to securing financial stability, which is what we are interested in," said Choi Jong-ku, Chairman of the Financial Services Commission.
"If there are any concerns about retaining management control (of Samsung Electronics) we are saying, look for ways to keep it while lessening the risk."
Samsung Life Insurance is at the heart of a cross-shareholding structure in which it owns about eight per cent of Samsung Electronics, which has a market value of about US$340 billion, according to Thomson Reuters data.
(Reporting by Heekyong Yang and Yuna Park; Additional reporting and writing by Joyce Lee; Editing by Muralikumar Anantharaman)
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