KT Rejects Political Appointments... Political Winds Blow Again

Aftermath of KT Shortlist Announcement
Presidential Office: KT "Governance Must Be Fair and Transparent"
Ruling Party Criticizes as "Typical Tactic to Maintain Interest Cartel"

[Asia Economy Reporter Kang Nahum] Political interference is once again blowing toward KT, which is about to appoint a new CEO. After KT recently included only four current and former executives on its shortlist (candidates for CEO interviews), the Presidential Office expressed discomfort, citing KT's moral hazard, and the ruling party strongly criticized it as a "closed league." Inside KT, voices are rising that political intervention in the appointment of a private company’s CEO has gone too far, while concerns about a potentially prolonged management vacuum are also emerging.

On the 2nd, ruling party lawmakers from the Presidential Office and the National Assembly’s Science, Technology, Information and Broadcasting and Communications Committee sharply criticized KT for announcing a shortlist composed solely of its current and former executives. A Presidential Office official said at a briefing, “Governance must be conducted fairly and transparently. If that does not happen, moral hazard will occur within the organization, and ultimately, the public will bear the losses.”

On the same day, lawmakers from the ruling People Power Party on the committee held a press conference, pointing out that “KT’s next CEO appointment has turned into a ‘closed league.’” They said, “Current CEO Koo Hyun-mo tried to secure reappointment through a blind self-selection process to take control of KT, but various corruption allegations surfaced, making him a subject of investigation.” They added, “There are rampant rumors that Koo appointed Yoon Kyung-rim, head of KT Group’s Transformation Division (CEO), who is considered his avatar, as a candidate.” They criticized this as “a typical method of maintaining an ‘interest cartel’ by pushing and pulling each other within the interests of certain insiders.”

Earlier, 15 internal and 18 external candidates applied for the KT CEO position. However, only four current and former internal executives were selected as final interview candidates. Politicians from the ruling party, including former Foreign Ministry Trade Negotiations Chief Kim Jong-hoon and former Minister of Industry and Resources Yoon Jin-sik, were all eliminated. Some speculate that the exclusion of former Minister Yoon, who was considered a strong candidate from the ruling party, may have upset President Yoon Suk-yeol.

[Image source=Yonhap News]

However, Park Sung-joong, the ruling party’s secretary on the committee, dismissed the allegations of political interference, saying, “This is said with the hope that KT will be innovated and strengthened in expertise to grow into a company that benefits the public.”

KT has yet to release an official statement in response to the ruling party’s criticism. However, internally, reactions such as “This is going too far” are emerging. A KT official said, “We disclosed the verification list and procedures and gathered opinions from shareholders and labor unions, so it is incomprehensible to be accused of unfairness,” adding, “If that’s the case, wouldn’t it be better to just go with an appointment system?”

Now, attention is focused on the shareholders’ meeting scheduled for the end of this month. Even if a KT CEO is elected, approval from the National Pension Service, the largest shareholder, is required at this meeting. If political signals opposing the candidates on the shortlist continue, the National Pension Service is likely to exercise its voting rights against the CEO appointment agenda. Since Hyundai Motor Company and Shinhan Bank, the second and third largest shareholders of KT, also have the National Pension Service as their first and second largest shareholders respectively, any candidate selected from the shortlist could be rejected.

In such a case, the appointment process will return to square one. Currently, personnel and organizational restructuring at KT headquarters and affiliates are all ‘on hold,’ meaning this management vacuum could be prolonged.