Last month, while Japanese rival Sony was announcing restructuring plans including 10,000 job cuts, Samsung Electronics paraded a $33-billion expansion plan creating 14,000 new jobs.
The company that emerged from the 1997 Asian financial crisis stronger than ever, toppling the Hyundai group as South Korea's top corporate performer, should have been basking in glory and applause.
Instead, the announcement only succeeded in temporarily deflecting public attention away from a tangle of troubles that have been brewing around the company for months.
A major difficulty for the corporate giant that accounted for nearly 20 percent of all South Korean exports last year has been its battle against a government-backed drive to limit the power of top conglomerates.
South Korea maintains strict regulations to curb the growth of the conglomerates that control nearly 40 percent of the economy and whose reckless expansion was blamed for triggering the 1997 crisis here.
But Samsung has led a corporate revolt. Backed by other conglomerates it complains that those regulations make local firms more vulnerable to hostile takeover bids by foreign investors.
Foreign investors hold a stake average of 46.8 percent in South Korea's top 10 conglomerates, while the foreign stake in Samsung stands at 54 percent of its total market capitalization.
Critics dismissed Samsung's argument as unwarranted and suggested that the group could fend off any hostile takeover bids by enhancing transparency.
"Priority must be given to transparency as there is no immediate threat from foreign capital to Samsung's ownership," said Song Ho-Chang, a lawyer and advocate of corporate governance.
At the center of debate is a 1997 law that forbids affiliates of conglomerates from holding shares of nonfinancial affiliates in excess of 5 percent.
The government is drawing up amendments under which conglomerates would be compelled to dispose of all stock holdings that exceed the 5 percent limit.
"Samsung is bringing misfortune on itself by ignoring calls to improve corporate governance," said Kim Woo-Chan, a researcher at the state-financed Korea Development Institute.
He accused Samsung's founding family of clinging to an outdated perception that the group's helm must be transferred to offspring.
The attacks against Samsung turned into an onslaught in August when allegations emerged of Samsung's illicit links to politics through a slush fund.
Hong Seok-Hyun, a brother-in-law of Samsung Group chief Lee Kun-Hee, resigned as ambassador to the United States over a 1997 conversation taped by intelligence officials.
The conversation between Hong and a Samsung executive about where the group should place illegal political donations triggered public anger.
Criticism intensified last week when a court convicted two Samsung executives for illegally handling the father-to-son transfer of ownership at Samsung Everland, the group's holding company.
The charges focused on a 1996 deal at Everland, an amusement park operator, which helped the 64-year-old chairman pass on control of the empire to his son, Lee Jae-Yong.
The ruling lent weight to a widespread belief that conglomerate owners have engaged in illegal intra-group transactions, transferring wealth to their offspring or manipulating share trading to avoid inheritance taxes.
"Samsung was keeping a complicated nexus of cross holdings among its units to help Lee and his family maintain their grip on the group," said Chung Kwang-Sun, a Joongang University business administration professor.
Everland owns 20 percent of Samsung Life. The insurer holds a 7.23 percent stake in Samsung Electronics, which in turn controls a 46.8 percent stake in Samsung Card.
The credit card issuer owns 25.6 percent of Everland, while Samsung Life has 8.55 percent of Samsung Card. The son has 25.1 percent in Everland, with his three sisters holding 25 percent.
© 2005 Agence France-Presse
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