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GM Korea ignores KDB after borrowing $750 million

Korea Development Bank Chairman Lee Dong-gull speaks during a National Assembly audit, Friday. / Yonhap
Korea Development Bank Chairman Lee Dong-gull speaks during a National Assembly audit, Friday. / Yonhap

By Park Jae-hyuk

GM Korea was found to have ignored its second-largest shareholder the Korea Development Bank (KDB), although the state-run bank lent it $750 million in 2018 to normalize the cash-strapped carmaker.

Data the KDB gave to Rep. Yoon Doo-hyun of the main opposition People Power Party showed Friday GM Korea had refused the bank's request made in October 2019 for access to the company's 2018 tax investigation report.

The KDB made the same request in February this year, but was again rebuffed.

In 2018, GM Korea faced an allegation that it evaded taxes here by rigging transfer prices.

Lawmaker Ji Sang-wook of the then minor opposition Bareun Mirae Party claimed the carmaker bought auto parts for higher prices from its U.S. headquarters but sold its vehicles to them for lower prices.

After the controversy was made public, the KDB asked GM Korea in 2019 to share its 2018 tax investigation report. However, the company has continued to refuse the request, citing the avoidance of double taxation agreement between Korea and the U.S.

"It is nonsense that the KDB is unable to receive a single report, considering the multiple billions of won in taxpayer money given to GM Korea," Rep. Yoon said.

During Friday's National Assembly audit of the state-run lender, Rep. Bae Jin-gyo of the minor opposition Justice Party also pointed out that GM Korea CEO Kaher Kazem and company executives have received huge bonuses since the KDB gave financial support in 2018.

The KDB chairman, however, said he did not know about the specific sizes of the bonuses paid to the executives. The KDB holds a 17 percent stake in GM Korea as its second-largest shareholder. It has the right to recommend three directors to the carmaker's eight-member board.


Korea Development Bank Chairman Lee Dong-gull speaks during a National Assembly audit, Friday. / Yonhap
Korea Development Bank Chairman Lee Dong-gull speaks during a National Assembly audit, Friday. / Yonhap

By Park Jae-hyuk

GM Korea was found to have ignored its second-largest shareholder the Korea Development Bank (KDB), although the state-run bank lent it $750 million in 2018 to normalize the cash-strapped carmaker.

Data the KDB gave to Rep. Yoon Doo-hyun of the main opposition People Power Party showed Friday GM Korea had refused the bank's request made in October 2019 for access to the company's 2018 tax investigation report.

The KDB made the same request in February this year, but was again rebuffed.

In 2018, GM Korea faced an allegation that it evaded taxes here by rigging transfer prices.

Lawmaker Ji Sang-wook of the then minor opposition Bareun Mirae Party claimed the carmaker bought auto parts for higher prices from its U.S. headquarters but sold its vehicles to them for lower prices.

After the controversy was made public, the KDB asked GM Korea in 2019 to share its 2018 tax investigation report. However, the company has continued to refuse the request, citing the avoidance of double taxation agreement between Korea and the U.S.

"It is nonsense that the KDB is unable to receive a single report, considering the multiple billions of won in taxpayer money given to GM Korea," Rep. Yoon said.

During Friday's National Assembly audit of the state-run lender, Rep. Bae Jin-gyo of the minor opposition Justice Party also pointed out that GM Korea CEO Kaher Kazem and company executives have received huge bonuses since the KDB gave financial support in 2018.

The KDB chairman, however, said he did not know about the specific sizes of the bonuses paid to the executives. The KDB holds a 17 percent stake in GM Korea as its second-largest shareholder. It has the right to recommend three directors to the carmaker's eight-member board.


Park Jae-hyuk pjh@koreatimes.co.kr


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