South Korea's most powerful businessman said yesterday he would step down after 20 years at the head of the giant Samsung Group following his indictment last week for tax evasion and breach of trust.
The televised announcement by Lee Kun-hee, 66, who has achieved almost heroic status in South Korea for his role in the fortunes of Samsung, came as a shock even in a society long used to its top businessmen being hauled into court.
But analysts pointed out Mr Lee and his family still control the country's largest conglomerate, sometimes dubbed the "Republic of Samsung" and whose dozens of affiliates account for around a fifth of South Korea's exports. The group's products range from computer chips and handphones to supertankers.
"I will step down from the Samsung chairman position today. I am saddened as there is still much to do and a way to go," an apologetic but expressionless Lee said in a brief statement broadcast on national television.
The group will dismantle its powerful strategic planning office, which critics say is an opaque organisation able to wield influence across some 60 affiliates, including flagship company Samsung Electronics, a world leader in computer memory chips and flat display screens.
"I don't see anything more than a change of people in charge. There's no change at all in the fact that (the Lee family) will remain the owner," said Oh Suk-tae, an economist at Citibank.
Mr Lee's son, Lee Jae-yong, seen as being groomed to take over, will step down from his executive post and work abroad for the group in another, unspecified role.
Four other top executives also quit, including the head of the group's strategic division and the chief executive officers of Samsung Fire and Marine Insurance and Samsung Securities Co Ltd.
Samsung group firms account for 20 per cent of total market capitalisation on the main board of the South Korean bourse.
The group has more than 250,000 employees and its annual revenues of $160 billion are around the size of Singapore's GDP.
On two key issues, Samsung said it would not move into the banking sector, nor would it set up a holding company.
There has been widespread speculation that once the government eases restrictions, the major family-run "chaebol", or conglomerates, would snap up local banks.
A special prosecutor in January launched a probe into corruption allegations after a former top legal executive at the group said some of its top management hid money and kept a slush fund to bribe politicians, prosecutors and officials.
The prosecutor indicted nine other Samsung executives. But it found no evidence to support the bribery allegation. If found guilty of tax evasion Mr Lee could serve from five years to life in jail.
South Korean conglomerates powered South Korea from the ashes of the 1950-53 Korean War to become Asia's fourth-largest economy, but have been accused for years of creating impenetrable management structures.
Critics say few changes have been made over the years at the family-run business groups, despite a number of high-profile convictions of their leaders.
"This cannot be considered a major reform measure even with Mr Lee stepping down, because the management structure of Samsung is built up so that he can influence it as he wishes anyway," said Park Won-suk, a senior official with the People's Solidarity for Participatory Democracy.
"We see this announcement as one with perhaps symbolic and visible results, but all the essential points related to the management structure are not included. It failed to address the core of the issue," said Mr Park, whose group has for years called for reform of Samsung management practices.
In contrast, pro-business groups have voiced concerns that the probe has delayed important management decisions at Samsung.
The Korean Federation of Industries called the announcement "shocking".