“Instead of being a professional firm, KPMG Korea is becoming a political organization in which the CEO and his close aides are exploiting their authority in running the business for their own benefit”

November 28, 2013 Leave a comment

2013-11-27 18:27

Samjong mired in internal feud

By Yi Whan-woo
Samjong KPMG, the country’s third-largest auditor, is embroiled in an internal conflict because followers of former CEO Yun Young-gak are up in arms with current CEO Kim Kyo-tae for Kim’s alleged attempt to weed out his predecessor’s supporters.Choi Seung-hwan, a senior partner, criticized the incumbent CEO in an e-mail to executives and employees on Nov. 13. The Seoul-based member company of KPMG International said Thursday it discussed taking appropriate measures against Choi during a meeting of its shareholders.
A Samjong KPMG spokesman said on condition of anonymity that it will take time to decide what action to take on Choi. He declined to give further details on the situation, but industry sources speculate the firm included Choi’s future with the company on the meeting’s agenda.
“Instead of being a professional firm, KPMG Korea is becoming a political organization in which the CEO and his close aides are exploiting their authority in running the business for their own benefit,” Choi wrote.
He also wrote that Kim, 55, has taken “retaliatory actions” against those who voted for Yun as chairman in a May 2012 meeting. Yun, 60, failed to win two-thirds of the vote as required by the firm’s regulations and left the company in December 2012.
“I have expressed my wish to end my career here before, and instead, you told me you would not forget the hardship I gave you in the power struggle between me and Yun,” Choi wrote.
According to Choi, he was a founding member of Samjong Accounting Corp. in 1994 along with Yun. The firm acquired its current name after becoming Netherlands-based KPMG International’s independent legal entity in Korea in 2000.
Choi claimed that he is the “only survivor” among Yun’s supporters, who were forced to leave Samjong KPMG after Yun left the firm.
In March, two other Samjong founding members — Kim In-soo and Cho Tae-hyun — left the company, along with 60 consultants and accountants, following the firm’s decision to restructure its consulting division because of its poor performance. Kim was the consulting services leader.
The company’s sales in consulting reached 115.1 billion won ($108.43 million) in 2012, but its operating profits decreased by 45.4 percent.
“The industry in general was facing problems, and our restructuring at that time was purely a business decision, not a political one,” said a Samjong KPMG official, on condition of anonymity.
However, a senior partner at a different auditing company said that the move was widely seen as Kim Kyo-tae’s attempt to weed out Yun’s followers. He added that Yun and Kim have been competing for power since 2010 when Samjong KPMG was considering withdrawing from KPMG International.
Yun, then chairman and CEO, pushed to join the London-based Ernst & Young, the world’s fourth-largest auditor, when KPMG sought to take control of Samjong’s business, including personnel management.
Yun eventually decided to maintain the partnership with KPMG International after it gave up its attempt to take control and committed to investing $45 million annually in Samjong, according to the official.
Yun maintained his title as chairman until May 2012, but conceded his post as CEO to Kim in May 2011.

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