KDB puts reforms into effect to boost its efficiencyKorea Development Bank retirees cannot land jobs at companies that are under restructuring. Additionally when a buyer is interested in a nonfinancial company that KDB invested in, the state-own financial institution will immediately sell it.
These were some governance reforms announced by KDB Monday.
The reforms have been planned since June after an “innovation committee” of outside experts was formed. The overhauling of the organization comes after KDB was criticized for its mishandling of the shipping and shipbuilding industry’s meltdown, which have affected the overall economy and tarnished Korea’s reputation.
Banning employees that retired or resigned from KDB from taking jobs at companies that are under restructuring follows criticism that many former KDB employees were “parachuted down,” or given plum jobs, at such companies at Daewoo Shipbuilding and Marine Engineering. They are blamed for reckless and careless management. Some have been accused of failing to detect irregularities in DSME’s books. In fact, it was later proven that DSME cooked its books to make it look as if it was in the black when actually it was actually suffering massive losses.
In the past 10 years, some 10 former employees of KDB have reportedly taken high positions including CEO, auditors and even outside directors at seven of DSME’s affiliates.
KDB has a 49.74 percent stake in the shipbuilder.
The 15 companies that are under restructuring were employing 16 former KDB employees as of end of August. KDB claims none will be left when their tenures end in March 2019.
As part of its restructuring plan, KDB said it will immediately sell stakes it has in companies when an interested party offers to buy them. This includes DSME.
Currently there are 132 companies that KDB is invested in. Under the new restructuring plan, KDB will be completing sales of 95 companies. Some 37 companies including DSME as well as Daewoo E&C will be put up for sale next year.
KDB said it has set a principle to sell off shares it has in these companies at market price rather than waiting for the share values of these companies to improve.
In the past, it didn’t sell its stakes in DSME because it was waiting for the share price of the shipbuilder to improve.
KDB is also taking steps to transform its corporate culture to enhance competitiveness. The state-run bank said it plans to reinforce a performance-based work environment by adopting a system that would enhance the expertise of its employees.
When hiring new recruits, it will choose employees based on their expertise.
Under the current system, recruits were hired in large groups and afterwards cycled through different departments. Under the current system, new employees learn how different department works, but recruits lack expertise from the start, which was a cause of mismanagement of companies.
BY LEE HO-JEONG [firstname.lastname@example.org]
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