Samsung suspends business with select software partner companies

Samsung Electronics Co. has recently “suspended transactions” with select software partner companies through regular auditing, with around 10 entities being looked at.

Industry sources on Monday said the electronics giant is notifying each company of the audit results. The targets are mainly domestic small and medium companies in information and communications technology (ICT) such as those in database management and cloud services.

Samsung Electronics is known to have told each company of a suspension of business lasting several years for providing improper hospitality and entertainment to executives and employees from headquarters. The period of suspension varied but a few cases are said to have seen a ban of three years.

If transactions with Samsung Electronics, the country's largest ICT company, are suspended, a partner company is expected to suffer huge damage to sales and could see negative effects in the conclusion of new contracts with other clients.

"Samsung Electronics decided this so we have no comment," a source at one of the audited companies said.

In and out of Samsung Electronics, the view is that company chairman Jay Y. Lee's commitment to law-abiding management was reflected in this decision despite the trouble of changing a large number of service providers at the same time.

"From the perspective of an ICT service company, temptation exists such as entertainment for the client for landing a contract," a source in the ICT sector said. "This move is an opportunity to break from this negative practice."

Write to Sang-Eun Lee at selee@hankyung.com