[Exclusive] Korea GM President Under Travel Ban... 'Judicial Risk' Dims 3-Year Term

Non-Detained Indictment for Illegal Dispatch of Partner Company Workers... First Among Korean GM Presidents
Must Stay in Korea Under Exit Ban to Face Trial
Three-Year Term Starting September 1... Successor Uncertain Amid Legal Proceedings
Concerns Raised Over 'CEO Risk Unique to Korea'

Kaher Kazem, President of Korea GM Photo by Yonhap News

[Asia Economy Reporters Hyewon Kim and Gimin Lee] It has been confirmed that Kaher Kazem, CEO of Korea GM, who was indicted for illegally dispatching over 1,700 workers belonging to partner companies, is currently restricted from leaving the country due to an exit ban. Kazem, who completed the full three-year term typical for a Korea GM CEO, now finds himself staying in Korea without a successor appointed and facing trial.

According to industry sources on the 2nd, the Ministry of Justice issued an exit ban order on Kazem and other Korea GM executives who were indicted without detention on the 21st of last month for violating the Act on the Protection, etc. of Dispatched Workers (Dispatch Workers Act).

Multiple sources and Korea GM confirmed this fact, stating, "The exit ban is the first case among all past Korea GM CEOs and is an unusual measure related to an in-house subcontracting lawsuit."

Kazem and four other Korea GM executives are accused of illegally dispatching 1,719 workers from 24 partner companies to Korea GM’s Incheon Bupyeong, Gyeongnam Changwon, and Jeonbuk Gunsan plants from September 1, 2017, to December 31, last year. This is the first time a sitting Korea GM CEO has been indicted. The investigation began over two years ago after the Korea GM Non-regular Workers’ Union filed a complaint citing illegal dispatch.

Attention has focused on the expiration of Kazem’s three-year term, which began on September 1, 2017. While there was speculation about a possible extension based on his performance during the term, the judicial risk of a "CEO indictment" introduced uncertainty. The Korea GM Non-regular Workers’ Union also urged the exit ban on Kazem in the same context.

With the exit ban imposed due to this case, Kazem is expected to remain in Korea for the time being and engage in legal battles. A legal expert commented, "Although many defendants are involved in the Korea GM Dispatch Workers Act case, the charges and issues to be addressed in court focus on violations of the Dispatch Workers Act. Since the case is assigned to a single judge, it is expected to take about six months until the first trial verdict. If Kazem goes through all three trial levels, he may have to stay in Korea for about two years."

While opinions that the exit ban on Kazem are excessive predominate, some in the imported car industry argue it was inevitable considering cases where foreign CEOs fled abroad to avoid criminal punishment. However, there is a consensus criticizing the "unique CEO risk in Korea." One foreign CEO remarked on Kazem’s exit ban, "Korea is a region where global CEOs avoid being dispatched because there are many risks that stifle management activities, and they tend to be treated as potential criminals." This refers to the excessive regulations and penalties in Korea’s economic, labor, and environmental laws, where most penalty provisions apply not only to violators but also to business owners. This aligns with James Kim, chairman of the American Chamber of Commerce in Korea (AMCHAM), who said, "In Korea, even if only one employee among many commits a wrongdoing, the CEO bears joint responsibility, which is a significant risk."

The business community cites three major risks: regulations that are hard to find elsewhere globally, frequent lawsuits and penalties resulting from them, and policy uncertainties due to inconsistent enforcement depending on political circumstances. The illegal in-house subcontracting issue that has tied Kazem’s hands even after his term ended has long been a contentious topic in the automotive industry. A Korea Automobile Manufacturers Association official pointed out, "Unlike countries such as the U.S., Germany, Japan, and Europe, where workforce redeployment or dispatch is possible depending on management conditions, Korea’s laws and systems are among the most rigid worldwide, prohibiting dispatch and restricting in-house subcontracting. In-house subcontracting is also considered illegal dispatch, making it practically impossible to utilize external personnel and greatly reducing labor flexibility."

Korea GM claims it has followed government subcontracting operation guidelines as much as possible but is being stigmatized as an illegal company with both the CEO and corporation indicted. They say that although laws and Ministry of Employment and Labor guidelines have not changed, interpretations vary depending on the political climate, leading to repeated investigations and trials. Korea GM was previously indicted for illegal dispatch of subcontractors from 2004 to 2006 and was fined by the Supreme Court in 2013. When related suspicions arose, Korea GM restructured operations from 2007 onward in agreement with labor unions to comply with employment ministry guidelines. As a result, the ministry selected Korea GM as an excellent company for in-house subcontracting operation in 2012 and administratively judged in 2013 that Korea GM was operating subcontracting legally.

If judicial procedures extend up to two years, appointing Kazem’s successor is expected to face difficulties, as the successor may be reluctant to be dispatched to Korea. An industry insider said, "Korea GM is a large foreign direct investment company that has contributed significantly to the domestic economy and job creation, but there are concerns that normal management activities in Korea and attracting other global corporate investments may be negatively affected."

This content was produced with the assistance of AI translation services.