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GM Korea CEO Stays Mum about Rumor about GM’s Withdrawal from Korea
Neither-Confirm-Nor-Deny
GM Korea CEO Stays Mum about Rumor about GM’s Withdrawal from Korea
  • By lsh
  • October 24, 2017, 01:00
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GM Korea CEO Kaher Kazem is answering questions from Korean lawmakers as a witness during the National Policy Committee’s inspection of the Korea Development Bank among others on Oct. 23.
GM Korea CEO Kaher Kazem is answering questions from Korean lawmakers as a witness during the National Policy Committee’s inspection of the Korea Development Bank among others on Oct. 23.

 

Kaher Kazem, CEO of GM Korea did not expressly deny a rumor about GM Korea’s withdrawal from Korea and repeatedly answered, "I will do my best to normalize the management."

"GM Korea executives are doing its best to normalize the management of GM Korea," CEO Kazem said to a question about GM’s withdrawal from Korea from Ji Sang-wook, a lawmaker of the Bareun Party by attending as a witness to a parliamentary inspection of the administration by the National Policy Committee on October 23. “We are doing everything we can do to develop a sustainable model." Although lawmaker Ji asked the GM Korea CEO two more questions about the withdrawal, CEO Kazem only said, "We are doing our best."

Kazem also denied that GM Korea did not cooperate properly with the KDB's audits of GM Korea as a shareholder of GM Korea. "I know that GM Korea has offered all necessary cooperation in accordance with an agreement among shareholders and related laws," Kazem said.

An official of an accounting firm which audited GM Korea said, however, "We neither received data nor had proper interviews. I think GM Korea was more uncooperative than other cases."

“Transfer prices are a reasonable policy because the policy is commonly used by global corporations. Our export prices are determined in accordance with competitive environments of markets," CEO Kazem said in response to a question, “Did a transfer pricing policy which raises the portion of cost in sales put GM Korea into distress?”

When asked “Did GM Headquarters give GM Korea borrowings at a high interest rate?” CEO Kazem said, "Signing the loan contract aimed to lower financial costs and secure operation funds to keep the company moving forward."

With respect to GM Korea’s answer that GM Korea provided the necessary data and materials for shareholders’ audit rights, Lee Dong-geol, chairman of the Korea Development Bank, said he did not agree with GM's answer that it provided necessary data for shareholders’ audit.

Meanwhile, "It is desirable to actively support the current management’s reform efforts, rather than accentuating a withdrawal rumor," Lee answered to a question about the withdrawal of GM Korea by Hong Il-pyo, a lawmaker of the Liberty Korea Party.

"It is right for the National Assembly and the Korean government to give strong support to GM Korea as the company says that they will make endeavors to improve GM Korea management rather than bring out the rumor about GM Korea. The KDB will play its roles, if any,” the KDB chairman said.  

When Lee Jin-bok, chairman of the National Policy Committee, asked, "Are you sure that GM will not shut down GM Korea and leave Korea?" chairman Lee said, "I do not assure it but I think that as the CEO of GM Korea publicly promised to improve the management of GM Korea, it is the best way to oblige GM Korea to do so. If the Ministry of Trade, Industry, and Energy and related ministries go ahead with policies, the KDB will sincerely play its roles."

"GM Korea owes three trillion won (US$2.7 billion) to GM Headquarters. Over the past 15 years, GM Korea has paid about 500 billion won (US$450 million) in interest to GM Headquarters," lawmaker Hong pointed out. Then, with regard to Hong’s statement, "We made efforts to make an improvement such as meetings with the top management of GM Korea, participation in general shareholders’ meetings and sending documents as we judged that the interest rate was high. But the KDB had a mere 17.3% stake in GM Korea and a limit as the second largest shareholder of GM Korea so could not prevent GM Headquarters, the largest shareholder of GM Korea, from doing what they wanted to do,” chairman Lee said.