Lotte Card CEO Jo Jwajin Faces Parliamentary Audit... All-Out Scrutiny Over Homeplus and Hacking

Jo to Attend Political Affairs, Public Administration, and Science Committee Audits
Ruling and Opposition Parties to Question Hacking Response and Budget Cuts
Opposition Focuses Fire on "MBK Unfair Support" Allegations

On October 14, members of the National Assembly's Political Affairs Committee plan to focus their questioning on Jo Jwajin, CEO of Lotte Card, during the parliamentary audit, specifically regarding the company's response system to hacking incidents and the issue of securitization of Homeplus purchase-only cards. The committee is also expected to raise fundamental questions about the company's management system, including customer information protection protocols and allegations of unfair support by the parent company MBK Partners, drawing attention from the entire financial sector to Lotte Card's response.

According to political sources and Lotte Card on this day, CEO Jo is scheduled to appear before the Political Affairs Committee on October 14, followed by the Public Administration and Security Committee on October 17, and the Science, ICT, Broadcasting, and Communications Committee on October 21.

The key issues for the Political Affairs Committee's audit are: ▲Inadequate response system to the hacking incident that occurred in August ▲Reduction in the proportion of the information protection budget compared to the total IT budget ▲The ratio of purchase-only card securitization by the parent company MBK and allegations of unfair support. Several committee members plan to focus their seven-minute afternoon witness examination sessions on CEO Jo and KT CEO Kim Youngseop. The audit will proceed with questions to institutions (such as the Personal Information Protection Commission and the Fair Trade Commission) in the morning, followed by witness examinations in the afternoon.

First, both ruling and opposition parties will question the handling of the hacking incident. Kangil Lee, a member of the Democratic Party of Korea, plans to ask about the reduction in the information protection budget as a percentage of the IT budget from 12% in 2021 to 8% in 2023, as well as the delayed response, with the breach only being identified 17 days after the initial hacking attack. Sanghoon Kim, a member of the People Power Party, will inquire about the reason for the information protection budget being set at 12.8 billion won for this year, a 15.2% decrease from the previous year's 15.1 billion won. Changmin Han, a member of the Social Democratic Party, intends to focus on why the preventive system failed to operate properly.

A representative from Kangil Lee's office explained, "Rather than the details of the incident's timeline, the focus will be on Lotte Card's reduction in the proportion of the information protection budget."

A representative from Changmin Han's office also stated, "We plan to ask CEO Jo Jwajin and CEO Kim Youngseop why the information protection prevention system was not properly activated."

The opposition party plans to concentrate its efforts on allegations that the parent company MBK unfairly supported its subsidiary Lotte Card. The office of Youngha Yoo, a member of the People Power Party, intends to question why MBK only securitized 53% of the total funds when Lotte Card was adopted as the Homeplus purchase-only card. While both Hyundai Card and Shinhan Card, which also operate Homeplus purchase-only cards, securitized 100% of the funds, Lotte Card securitized only 53%, leaving the remaining 47% (approximately 370 billion won) on Lotte Card's books.

A representative from Youngha Yoo's office stated, "Since there are allegations that the parent company MBK used its subsidiary Lotte Card as a private safe to unfairly support Homeplus, we plan to focus our questioning on this issue."

Lotte Card is currently concentrating its entire organizational capacity on responding to the hacking incident. The company has stated that it will respond sincerely to questions regarding the hacking allegations during the audit. The previous day, Lotte Card announced that it had completed protective measures for customers who applied for card reissuance among the 280,000 customers potentially affected by unauthorized transactions through key-in transactions. The total number of reissuance applications was 216,182, and all 215,240 cases, excluding some special cards (942 cases), have been processed.

A Lotte Card representative stated, "CEO Jo plans to attend all three standing committee audits, including the Political Affairs Committee, and will respond sincerely to all questions raised."