Shareholders sue departing KEPCO head

By Kim Tae-gyu

Outgoing Korea Electric Power Corp. (KEPCO) President Kim Ssang-su is walking away with a heavy heart as shareholders brought him to court for his mismanagement over the past three years.

KEPCO said Friday that a total of 13 minority shareholders filed a lawsuit asking Kim to pay 2.8 trillion won to the firm, the amount equaling the financial losses they claim KEPCO suffered due to Kim. Their rationale: While at the helm, Kim failed to raise electricity charges enough to cover costs in Aug. 2008 to incur losses of 500 billion won in 2009, 1.8 trillion won in 2010 and 500 billion won this year so far.

The former LG Electronics CEO did raise electricity bills three times — 3.9 percent in 2009, 3.5 percent last year and 4.9 percent this summer, but it was not enough.

Such increases did not reflect the abrupt rise of raw material prices such as coal and uranium. Current electricity rates are estimated to cover just 90 percent of overall expenses.

Consequently, KEPCO chalked up losses of 3.7 trillion won in 2008, 568.7 billion won in 2009, and 1.8 trillion won last year. During the first half of 2011, there has been little change.

In this climate, KEPCO has attempted to substantially raise power bills but faces strong opposition from the government as it deals with already soaring inflation. “We are confirming the exact demands of the shareholders. We will release our official stance on the issue after investigating the case,” a KEPCO representative said.

Kim’s term will finish on Aug. 26 and his replacement is yet to be decided. Kim Joong-kyum, the current CEO at Hyundai Engineering and Construction, is considered a strong contender to take the reins at KEPCO for the next three years.