Prosecution raids KB over IT misconduct

Prosecutors on Tuesday raided KB Kookmin Bank’s computer center in Seoul over alleged irregularities in the bank’s introduction of a new computing system, according to KB officials Tuesday.

Investigators seized documents and emails sent between IT department employees and KB Financial Group CIO Kim Jae-yeol, prosecutors said.

“The seized emails will help us check conversations concerning the process of switching the bank’s mainframe system,” an investigator said.

The raid came after the Financial Supervisory Service filed a complaint with the prosecution against four high-ranking KB officials Monday, including group chairman Lim Young-rok. 

Kim and other executives are suspected of concocting a report written by a consulting firm in order to change from an IBM-based mainframe system to a Unix one.

The four executives also allegedly fabricated and submitted Unix’s benchmark test, or BMT, without actually conducting one, according to the financial watchdog.

The prosecution said it would probe whether there was an illicit trade-off between the Unix system operator and KB officials, given that a system change can cost between 200 billion won ($193 million) and 300 billion won.

The attempt had also been seen as part of a power struggle between chairman Lim and bank president Lee Kun-ho, who immediately resigned following an order from financial regulators last week.

Lim is currently being pressured both by the regulators and the group’s board of directors to step down.

“He will make a decision soon before the board votes on Lim’s resignation,” a source told a local daily on Tuesday.

KB Financial Group’s board chairman Lee Kyung-jae added, “Lim has not yet given his official response to the board.”

But the board said it was sure that Lim would voluntarily step down soon.

While the group has not released an official stance about possible successors to Lee and Lim, the board chairman hinted at the urgent need.

“Establishing a new system (under new chiefs) is priority to quell the situation and also for the group’s future,” Lee said.

Also, the Financial Supervisory Service is likely to hand down a severe punishment on KB’s credit card unit CEO Kim Duk-soo next Friday over a massive customer data leak that took place earlier this year.

Market insiders said the FSS is expected to announce a heavy penalty against CEOs of major financial organizations, including KB Kookmin Card, NongHyup Card, SC Bank and Citibank Korea.

Earlier this year, the country was hit by a string of data leaks that led some officials at financial companies, including KB Kookmin Card, to resign.

By Suk Gee-hyun (monicasuk@heraldcorp.com)