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Top executives resign over Korea's massive data leak

KB Kookmin Card CEO Shim Jae-oh (fourth from left) and other officials of the credit card company bow in apology for a customer data leak in downtown Seoul on Monday. (Park Hae-mook/The Korea Herald)

Publication Date : 21-01-2014

 

Top executives of KB Financial Group, NongHyup Card, and Lotte Card -- all three companies involved in the recent financial data breach -- said they would step down to take responsibility for the leak.

The list of officials includes KB Kookmin Bank CEO Lee Kun-ho and KB Kookmin Card CEO Shim Jae-oh.

Sohn Kyung-shik, the head of NongHyup Card, and Park Sang-hoon, CEO of Lotte Card, also said they would step down.

The move came after the nation’s chief financial regulator called on the CEOs to shoulder responsibility for the leak.

During a meeting with reporters on Monday, Shin Je-yoon, the Financial Services Commission chairman, said the chiefs would be held accountable.

Shin added that the Korean financial industry may lose its credibility altogether in the aftermath of the information leak, which affected up to 15 million people in Korea.

The first suspected cases of phone fraud using the stolen data were reported to the financial authorities on Monday afternoon.

The three firms that suffered the data breach ― KB Kookmin, Lotte and NongHyup ― had promised earlier in the day to compensate victims for any damage caused by their failures.

During an emergency news conference in Seoul, the CEOs also apologized for the leak and pledged to take responsibility for any losses.

Shin, meanwhile, continued to express concern.

“Allowing such stolen information to float around is a cause for concern for ordinary people. There is the possibility that the entire financial sector may lose its credibility,” he told reporters.

He also commented on the negligent control of the cyber security system.

“Due to the lack of skilled IT-security experts, scammers could easily steal consumers’ information en masse.”

Shin vowed that he would continue to urge the industry to keep its promise to compensate victims, adding that the authorities would later take tough disciplinary measures against the chief executives of commercial banks and credit card firms.

KB Kookmin Card CEO Shim said his company will “be held accountable for its legal and ethical responsibility.”

Market insiders shared the views of the FSC chief, predicting that global credit rating firms may downgrade local financial firms.

“A series of data leaks may affect credit ratings of Korea’s four major financial groups ― Woori, KB, Shinhan and Hana,” said a commercial bank executive.

On the same day, more than 100 individuals filed a damage claim against KB Kookmin, Lotte and NongHyup cards with the Seoul Central District Court.

Further, a consumer advocacy group is set to ask the FSS to conduct a full-fledged investigation into six financial firms early next month.

The Financial Consumer Agency said Monday said it would attract more than 200 petitioners over the next few weeks to ask the authorities to probe the three credit card firms and three commercial banks, which were involved in the data leak.

The three banks are KB Kookmin Bank and two foreign-controlled banks ― Citibank Korea and Standard Chartered Bank Korea. In late 2013, the two foreign banks collectively lost private data of about 130,000 clients.

Under the current regulatory rules, a consumer group composed of at least 200 individuals is allowed to ask the FSS to look into a financial firm in a class action-like petition against companies including banks, brokerage firms, credit card issuers and insurance firms.

The prosecution announced on January 9 that it had charged three people with stealing customers’ private data from the three card issuers in what is seen as the nation’s largest financial information leak.

The FSS said that regulatory inspectors suspect that customers’ of almost all commercial banks linked to the credit card firms have had their information leaked.

 

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