Complaint on Artificial Rating

The Korea Development of Bank (KDB) decided to give “D” rating for the management evaluation of Kumho Tire in 2016.
The Korea Development of Bank (KDB) decided to give “D” rating for the management evaluation of Kumho Tire in 2016.

 

Kumho Tires strongly opposed the Korea Development of Bank (KDB)'s evaluation of its management and decided to take a legal action.

Earlier on July 7, the KDB fixed the rating of the management evaluation of Kumho Tire in 2016 as “D” and notified of it through the latter’s shareholders council.

Kumho Tire said on July 10 that the company officially made an objection to the rating D which the creditors notified of as the rating was unfair and made artificially for a special purpose.

"The official rating of Kumho Tire by the KDB is an obvious defamation against the management of Kumho Tire," said Lee Han-seop, president of Kumho Tire.  “We disagree on this and will appeal for re-rating and devise all legal measures."

Kumho Tire claims that KDB has lowered the credibility of its management evaluation by mentioning that it can replace the management team by rating Kumho Tire’s management D in the process of selling the Kumho Tires. The company further claims that the KDB has suddenly tried to change its management evaluation score in 2016 during the ongoing sale of the company.

As Kumho Tires rebuffed and scraped it, the KDB tried to arbitrarily adjust the evaluation of the achievement of the management plan based on results in public disclosure announcements by using an external evaluation agency, sparking off a conflict with Kumho Tire. In other words, Kumho Tires received a B rating for two years in a row (2012 and 2013) in management evaluation which began in 2012 and graduated from its workout in 2014.

According to the KDB, in 2015 after graduating from the workout, despite the company's wage increase of about 30% to compensate for laborers’ pain during the workout period, the labor union continued to strike for 39 days, giving rise to poor performances and a D rating.

"The management evaluation is composed of 70 points in the achievement of the company’s management plan and 30 points in qualitative evaluation. In 2016, the degree of the achievement of the management plan in 2016 reached 59.2 points, which is a big increase from 42.4 points in 2015," Kumho Tire said. "In qualitative evaluation, the KDB gave Kumho Tire 10.6 points which were a big drop from 18.1 points in the previous year.”    

"The KDB deliberately lowered its qualitative rating score to make the management rating of Kumho Tires D (less than 70 points)," Kumho Tire added. “Considering Kumho Tire's achievement of its management plan in 2016, at least, the score of 2016 should eclipse the previous year's."

 

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