KG Mobility Chief Resigns Amid Suspicion of Embezzlement

KG Mobility Corporation will have to face a leadership clean-up after its chief executive officer, Jeong Yong Won, stepped down amid ongoing allegations of corporate embezzlement. He is also leaving the company as it struggles to stay afloat due to declining sales.

According to The Korea Times, business analysts and officials at KG Mobility confirmed Jeong’s departure on Friday, March 22. Many feared that the CEO’s “overnight decision” could further damage the company at a critical time when the car manufacturer was working hard to attain stable growth.

Dropping Sales and Embezzlement

As Jeong leaves his CEO role, his co-leader, Kwak Jae Sun, is expected to bear more burden since KG Mobility is currently facing many legal and financial issues. Kwak also serves as the chairman of the KG Group, the parent company of KG Mobility, formerly known as SsangYong Motor Company.

Kwak will now have to deal with declining sales at KG Mobility, which, according to data, dropped 44.8% in February compared to the previous year. The company was said to have been struck by extended inflationary pressure and high interest rates. Moreover, the demand for electric vehicles has been slowing down, so sales are not coming in.

On top of this problem, KG Mobility faces many scandals that negatively affect the brand’s image. The authorities recently launched a search-and-seizure on KG Mobility’s headquarters, and this news alone led to the fall of its stock price by 20% this week.

Business analysts explained that all embezzlement scandals, especially those involving top company executives, will impact stock prices. One worse scenario is that this may lead to a possible trading suspension.

Korea Capital Management Institute’s research fellow, Hwang Sei Woon, stated, “An embezzlement scandal of a certain firm’s executives does affect its stock prices, and financial authorities decide to suspend its stock trading if the embezzlement scale is big enough to pose a financial threat to its normal management.”

Jeong’s Exit from KG Mobility

Meanwhile, MD Today reported that although Jeong already resigned from his CEO role, he assured that he would not be leaving without completing some of his ongoing work, such as the development of a new vehicle. “He expressed his intention of resigning from the top executive position, but will work on his tasks,” an official from KG Mobility said.

Photo by: KG Mobility Website