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| Korea Development Bank Chairman Lee Dong-gull / Yonhap |
By Lee Kyung-min
Korea Development Bank (KDB) Chairman Lee Dong-gull is coming under intense criticism over his failure to prevent the recent spinoff of GM Korea's research unit, in what critics say was "complacency-induced fiasco."
The carmaker says the spinoff is part of the company's strategy to streamline its corporate structure and boost competitiveness, a claim union members say is nothing but a "devious" pretext for a withdrawal from Korea.
At the National Assembly audit Oct. 22, Lee admitted the state lender had failed to include measures against the carmaker's possible move toward a spinoff in an MOU the two signed in April, despite knowledge about the latter's intent clearly being indicated.
The disclosure sparked heated criticism against Lee, who highly assessed the deal in April, saying the "cost-effective" injection of 810 billion won ($750 million) in taxpayers' money is well worth it if 150,000 jobs are protected over the next 10 years _ GM Korea agreed to continue doing business here for that period.
However, the recent fiasco would not have occurred in the first place had Lee stipulated in an MOU that KDB retains the right to exercise a veto when the carmaker moves to establish a spinoff corporate entity, among 17 agenda items that require 85 percent of shareholders for approval.
The head GM office in the U.S. holds a 77 percent stake in GM Korea, while the KDB has 17 percent.
While KDB plans to file a suit seeking to nullify the spinoff saying the MOU has no clear stipulation on a veto concerning spinoff plans, the belated move is an all too desperate an attempt, according to critics.
"KDB is seeking the court judgment for a mistake it is responsible for," said an industry source, asking not to be named.
"It is not sure for which side the court will rule in favor, but the KDB well deserves the criticism mainly because it remained idle and failed to carry out due steps to fulfill responsibility on the outset."
Criticism of KDB is further growing as Lee failed to maintain consistency in rescue plan implementations on financially troubled firms.
The state lender under his leadership successfully helped major Korean companies ― STX Offshore & Shipbuilding and Kumho Tire ― avoid the much-dreaded court receivership in April 2018.
The last-minute resolution largely resulted from Lee's firm stance, mostly characterized by his long-held principle of "no government support without grueling self-rescue efforts."
Insolvent firms, under the principle, were required to come up with "painstakingly yielding" measures including pay cuts and reducing other company benefits, various perks union members long refused to give up.
However, in stark contrast, the rescue plan for GM Korea not only lacked such a thorough, exacting principle, but also a full, prior assessment on how to ensure the firm's healthy restructuring before "abruptly" deciding to inject taxpayers' money.
Lee said KDB will file a suit against the GM head office in the U.S., if GM Korea seeks to withdraw within the next 10 years.
"Notwithstanding the recent spinoff, the carmaker cannot withdraw from Korea before the 10-year term expires," he said at the National Assembly audit of Political Affairs Committee, Oct 26.
"Under the MOU, the Korean unit is duty-bound to manufacture cars over the next 10 years here. Unless the head office in the U.S. goes bankrupt, the Korean unit is under the duty. If it breaches the agreement, we will file the suit, and I think we will win."
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