KB chief censures FSS decision

Home > Business > Finance

print dictionary print

KB chief censures FSS decision

Lim Young-rok, chairman of KB Financial Group, yesterday attacked the likely decision that the financial authorities will impose a heavy punishment on him for triggering an in-house feud at the country’s leading financial institution and for failing to take responsibility as its leader.

The chairman made it clear that he will not resign and will do his best to normalize operations at the group.

During a press conference at a hotel in central Seoul, Lim said that the decision by the Financial Supervisory Service (FSS) to possibly punish Lim with a three- to five-year ban on taking a job in the financial sector is “unreasonable.”

“The FSS made the decision during the ongoing process of changing the main computing system of Kookmin Bank at a time when no details had been decided,” Lim said. “It is unreasonable for the authority to say that KB executives and employees, including myself, committed actions equivalent to a crime, and I will do my best to reveal the truth and prove my innocence.”

Lim has been embroiled in a feud for the past five months with Lee Kun-ho, the former CEO of Kookmin Bank, a KB affiliate, over switching the bank’s central computing system from the current IBM mainframe to Unix.

Lee opposed changing the system, as he argued that Lim had abused his power as group chairman by manipulating reports that estimated the cost of the switch and by nominating a candidate for the position of bank IT chief.

The internal affair was leaked to the public as Lee asked the FSS to investigate.

The FSS announced on Thursday it had discovered that Lim was involved in manipulating internal reports to swing the balance in favor of the Unix system. The authority announced substantial punishments for both Lee and Lim.

Lee announced his resignation right away, but Lim refused to step down. Lim stressed that he did not make any attempts to conceal the risks that could result from the system switch.

“As for the FSS accusation that we manipulated the reports regarding the benchmark test results of the Unix system, I should say that there was a unilateral agreement between the bank and group that the test results can be improved when we actually establish the system,” Lim said.

The FSS pointed out that Lim forced the introduction of Unix despite a larger estimated cost and higher error rate than the current IBM system.

Lim countered by saying that the cost of switching to Unix was estimated at around 190 billion won ($183 million) while the price of converting to IBM was around 150 billion won.

“But the IBM CEO’s price proposal didn’t include any ancillary parts, which could lead to a higher cost than the proposed or tantamount to the Unix cost,” the chairman said. “Our report found the Unix system has about a 4 percent fallacy ratio, but experts recommended that the ratio could be improved by running sufficient tests before introducing the system, so we decided to take out the number.”

The Financial Services Commission is to convene at a plenary meeting on Friday to discuss Lim’s punishment.

BY SONG SU-HYUN [ssh@joongang.co.kr]
Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)