S Korea’s financial watchdog to demand investigation of KB chairman

S Korea’s financial watchdog to demand investigation of KB chairman

South Korea's financial watchdog is stepping up punitive actions against KB Financial Group chairman Lim Young-rok, who has refused to resign over alleged managerial failures.

The Financial Services Commission said Saturday it would file a complaint with the prosecution against Lim on Monday for alleged irregular practices in the process of changing the group's computing system supplier from IBM to Unix.

The decision comes only days after the FSC ordered a six-month suspension and resignation for Lim. The penalty is the second strongest of the five stages of punishment that the FSC can impose on local financial institutions.

"We'll take actions in a fast, decisive manner should there be any need for regulators to intervene in the management structure or conflict," an FSC official said.

Last week, the Financial Supervisory Service handed down a lighter punishment that pushed the group's Kookmin Bank president Lee Kun-ho to step down.

Lim, however, has weathered a storm of criticism after refusing to resign. Market watchers expect regulators to continue playing hardball against the group head until he follows suit.

Prosecuting Lim is one example of both the FSS and FSC's eagerness to corner Lim, an official from a local bank said, declining to be named.

"Financial regulators will take it to the end. The conflict between the FSC and Lim has reached its peak and prosecutors have begun a thorough investigation into the computer system case," the official said.

Aside from the FSC's latest request for a prosecutorial investigation, the Seoul Central Prosecutors' Office has already been looking into the replacement of the computing system following a seperate complaint filed by consumer groups in May.

In response to the escalating controversy, the group's board of directors is set to vote on Lim's dismissal Wednesday and work out details, including the timing of Lim's departure and who his replacement would be, if he is voted to leave the post.

KB Financial's board consists of 10 executives including Lim and outside directors. Lim, however, was temporarily exempted from the board due to the suspension order.

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