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The retirement of Lee Kun-hee, the country's most powerful businessman, is likely to enhance transparency of the family-controlled conglomerate, which has been marred by a series of corruption scandals. But critics said the move would eventually lead to a father-to-son power transfer.
"Today, I have decided to step down from the post of chairman of Samsung Group," Lee told a nationally televised news conference. "I thought I had a long road to go and a lot of things to do. But I think this is time for me to leave, taking all the mistakes of the past with me," Lee said.
He also offered a public apology for his wrongdoing committed while running the business empire, vowing to "assume full legal and moral responsibility." The business tycoon said, "I express my deepest apologies for causing great concern to the public as a result of the special probe."
Special prosecutors charged Lee last week with tax evasion and breach of trust following a three-month investigation into suspected irregularities, such as bribery and the creation of slush funds. Lee was also suspected of masterminding a bribery network to smooth the illegal transfer of a controlling stake in the family business to his only son, to avoid inheritance tax.
But he was cleared of bribery and illegal lobbying allegations due to "lack of evidence." Lee was allowed to remain free until his trial. He could face more than five years in jail.
Prosecutors also indicted nine other top executives of the group's Strategic Planning Office for helping to hide 4.5 trillion won (US$4.5 billion) in Lee's assets and working secretly to transfer Lee's wealth to his children.
The special investigation was launched in January after Samsung's former top legal executive claimed the group used its subsidiaries to help create a 200 billion won (US$201 million) slush fund to bribe government officials, judges and prosecutors.
Lee, 66, has controlled the Samsung Group since 1987, when he inherited the conglomerate from his father, who founded the empire in 1938. Under Lee's leadership, Samsung has emerged as the world's largest computer-memory chipmaker, the world's leading maker of LCD panels and second-largest maker of mobile phones.
Its 58 subsidiaries, whose business ranges from credit card services to insurance, hospitals, apartments, hotels and amusement parks, account for 18 percent of South Korea's gross domestic product and one-fifth of its exports.
But Lee's leadership has also been dogged by corruption scandals. Lee has been embroiled in various court cases, but escaped criminal charges largely because he left South Korea whenever a probe began and returned home in a wheelchair with medical staff, apparently wooing public sympathy and avoiding interrogation. He was indicted in 1995 when he, along with other business leaders, was found guilty of bribing former President Roh Tae-woo in the early 1990s.
Kim Jong-seok, head of the Korea Economic Research Institute, said Lee's decision to step down could help enhance corporate transparency. "With the decision, Samsung should be reborn into an entrepreneur conforming to global standards," he said.
As part of the reform measure, Lee's son Jae-yong, who has been groomed to take over the helm, will also step down from his executive post and play a role in expanding overseas markets. Lee Jae-yong, 40, effectively controls the group with a controlling 25.10 percent stake in Samsung Everland, an amusement park operator. Everland owns a 19.34 percent stake in technology giant Samsung Electronics, which in return controls 7.23 percent in Samsung Life Insurance.
The insurance affiliate has a 46.85 percent stake in Samsung Card that holds 25.64 percent in Everland. Through this web of cross-shareholdings, Lee has controlled the whole conglomerate with a small stake.
Samsung will also dismantle its Strategic Planning Office, the group's control tower which has been accused of masterminding an illegal dynastic power transfer and other wrongdoing.
But critics said Samsung's reform plan lacks fundamental measures to boost corporate governance. "There was no comment on Mr. Lee Jae-yong's unfair gains. This means it would press ahead with the existing power transfer plan," said Kim Sang-jo, Hansung University professor who leads a civic group calling for better corporate governance.
