KT in Crisis... Left Isolated Like a 'Nakdonggang Ori-al' Trying to Please the Government

External Director Candidate Followed by Resignation of Affiliate CEO Nominee
Judicial Risks and Alienated Allies... Dark Outlook for March 31 Shareholders' Meeting
Misaligned First Step... Urgent Need to Resolve Government Conflict

[Asia Economy Reporter Oh Su-yeon] As the launch of Yoon Kyung-rim's KT team approaches, a series of adverse events have occurred, putting the situation in jeopardy. Attempts to overcome the crisis by appointing pro-government figures have failed.

On the 12th, Yoon Jeong-sik, the vice chairman of the Korea Blockchain Association and the nominee for KT Skylife CEO, tendered his resignation. The reason for his resignation is personal.

Yoon Kyung-rim, KT CEO Candidate [Photo by KT]

KT Skylife was scheduled to approve the appointment of Yoon as CEO at the shareholders' meeting on the 31st. However, an unusual event occurred where the nominee resigned even before the appointment was publicly announced. Yoon is not the only one. Earlier, on the 10th, Lim Seung-tae, an outside director candidate and advisor at the law firm Hwawoo, also resigned.

The consecutive resignations of nominees have raised concerns that forcing appointments to suit the government's preferences may have caused problems. Vice Chairman Yoon is an alumnus of Chung-Ang High School with President Yoon Seok-yeol. Advisor Lim served as an economic special advisor to Yoon Seok-yeol's campaign during the presidential election.

The government and ruling party have repeatedly criticized the process of appointing KT's next CEO. After KT released a shortlist of only four current and former executives as CEO candidates, a presidential office official remarked on the 2nd, "Governance must be conducted fairly and transparently." This pointed out that all new CEO candidates were current or former KT executives. KT, which aims to move beyond telecommunications to new businesses for the future, filled all CEO candidates with in-house telecommunications experts.

It is natural for telecommunications experts to be CEO candidates at KT. However, in a situation under the scrutiny of the government, political circles, and the public, it created the perception that only KT insiders could be on the CEO candidate list. Members of the National Assembly's Science, Technology, Information and Communications Committee from the People Power Party called the KT CEO candidate screening "a league of their own" and urged a halt to the appointments. They particularly harshly criticized candidate Yoon Kyung-rim as "Koo Hyun-mo CEO's avatar," claiming he appointed a proxy when Koo became the subject of an investigation.

Despite criticism from the government and ruling party, the appointment process was pushed forward, but with the National Pension Service as the largest shareholder and the telecommunications industry being a regulated sector, KT had to manage the situation of falling out of favor with the government. Ultimately, ahead of the shareholders' meeting on the 31st, KT hurriedly appointed pro-government figures to align with the administration's preferences.

However, this attitude by KT has drawn increasing criticism from the ruling party. There are accusations that they tried to use figures connected to the president as shields.

In this regard, KT's new labor union stated, "Suddenly recruiting someone who claims to represent the president as an outside director and subsidiary CEO and saying the crisis will be resolved is just political networking by management that only amplifies the crisis."

Judicial risks have also compounded the situation. On the 7th, the civic group "Just People" filed a complaint with the prosecution, accusing former CEO Koo and candidate Yoon of funneling KT affiliate KT Telecop's contracts to the facility management company KDFS and providing improper hospitality to outside directors to control the board. The prosecution is investigating not only the complaint but also overall suspicions regarding Koo and Yoon. Candidate Yoon is suspected of involvement in Hyundai Motor's acquisition of a company operated by Koo's brother while serving as a vice president at Hyundai Motor.

Hyundai Motor Group, the second-largest shareholder (Hyundai Motor 4.69%, Hyundai Mobis 3.1%), once considered an ally, recently conveyed to the KT board that major agenda items such as CEO or outside director appointments should consider the wishes of the major shareholder. This effectively turned their back on candidate Yoon. The largest shareholder, the National Pension Service, has not issued a specific stance but is likely to vote against, having previously criticized governance and transparency multiple times.

With just over two weeks until the shareholders' meeting, the future of Yoon Kyung-rim's KT team is uncertain. It is assessed that Yoon's approval at the shareholders' meeting will be difficult. Attempts to reconcile conflicts with the government after a misstep from the start were only temporary measures. Even if the meeting passes with support from foreign and minority shareholders, the administration and KT are expected to remain at odds throughout the term.