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| From left are Mercedes-Benz Korea interim CEO Kim Jee-seop, Mercedes-Benz Sweden and Denmark President Bjorn Hauber and former Mercedes-Benz Korea CEO Dimitris Psillakis. Courtesy of Mercedes-Benz Korea |
By Nam Hyun-woo
Mercedes-Benz Korea is under fire here after being hit with a hefty fine over rigging emissions data for its diesel vehicles, while the country manager position remains open as its newly designated CEO has not taken over the helm of company.
The previous CEO left Korea immediately before the prosecution began a separate investigation into Mercedes-Benz Korea. As such, criticism has been leveled that the company is attempting to dodge responsibility by leaving its Korean executives to handle the probe.
According to Mercedes-Benz Korea, it appointed Vice President Kim Jee-seop as interim president and CEO of the company last week.
Initially, Mercedes-Benz Sweden and Denmark President Bjorn Hauber was to succeed previous chief, Dimitris Psillakis, as of Aug. 1, but decided he could not take the position "due to personal reasons," the company said.
It explained that Hauber did not take the position due to "concerns over his family in the wake of the COVID-19 pandemic," denying any relation to emissions rigging scandal.
However, few believe the claim, as Hauber accepted the job in May, when the COVID-19 situation here was not much different than it is now. At that time, Hauber said in a press release, "I am extremely pleased to have been appointed as the new President and CEO of Mercedes-Benz Korea … I will make very efforts to continue our success in the Korean market by providing Mercedes-Benz's unique value and the best customer experience."
Officials in the country's automobile industry assume that the investigations into the emissions rigging affected Hauber's decision.
On May 6, the Ministry of Environment fined Mercedes-Benz Korea 77.6 billion won ($64.6 million), after it ruled that the company had installed emissions manipulation programs in 37,154 vehicles it sold from 2012 to 2018. This was the largest fine imposed by the ministry against an automaker in the so-called Dieselgate scandal, surpassing the 17.8 billion won handed down to Audi Volkswagen Korea in 2016.
Along with the fine, the ministry filed a complaint with the prosecution, which searched the company's headquarters near Seoul Station, May 27.
Before the investigation commenced, former CEO Psillakis, who led the company from 2015, went on a business trip and did not return after being appointed as president and CEO of Mercedes-Benz Canada starting Aug. 1.
Though Psillakis said in written interviews with a number of Korean newspapers that neither Mercedes-Benz Korea nor Daimler AG were aware of the fine and investigations, local criticism has grown against Hauber for declining to take the position.
Industry officials said Mercedes-Benz designated a vice president as an "acting president" to deal with the investigation and take the responsibility, instead of sending a foreign CEO here to do so.
"The position of the Mercedes-Benz Korea CEO is now a poisoned chalice ― the brand is showing robust growth in the Korean market, but at the same time it is under investigation by the prosecution," an import vehicle brand official said requesting anonymity.
"In such circumstances, it is natural that a foreign executive would refrain from taking the position to handle a negative issue that occurred during their predecessor's tenure," the official said. "Nevertheless, the practice of appointing an acting president to address the situation can be criticized as an attempt to dodge responsibility."
Some industry officials compare Mercedes-Benz's risk management with that of BMW Korea, which faced serious risks following a series of fires in its diesel vehicles in 2018.
At that time, BMW Group Korea Chairman Kim Hyo-joon apologized to the public for the fires and faced prosecution on claims that the company attempted to downplay problems in its diesel engines.
Since then, BMW headquarters and board members have been making continued apologies to allay consumer concerns, and held a number of world premiere events in Korea, which were interpreted as the brand's efforts to regain trust and showcase its commitment to the Korean market.
"BMW is recovering its reputation here, as its chief and headquarters took responsibility for their actions," another industry official said.
