SEOUL, September 22 (AJP) - A major data breach at Lotte Card has intensified scrutiny of MBK Partners, one of Asia’s largest private equity firms, which already faces mounting criticism over its troubled ownership of Homeplus, South Korea’s second-largest retail chain.
The two incidents have stoked concerns that MBK, which manages more than $30 billion in assets, has prioritized short-term financial returns at the expense of adequate investment in security and corporate governance.
Regulators are now weighing tougher oversight of the firm, and lawmakers have called executives to testify in a pair of parliamentary hearings.
The most recent blow came with a hacking incident at Lotte Card. Earlier this month, the company disclosed that sensitive customer data had been compromised in a cyberattack.
The breach followed years of uneven security investment under MBK’s ownership. Financial filings show that while spending on information protection rose briefly in 2021 to build a disaster recovery system, the overall share of IT budgets devoted to security has steadily declined, from 12 percent that year to 8 percent in 2023 — trailing behind rivals such as Shinhan Card and KB Kookmin Card.
The hack compounded an already worsening situation for MBK, which has been under fire for its handling of Homeplus. The firm acquired the retailer from Tesco in 2015 for about $6 billion, in what was then South Korea’s largest buyout deal. But critics say MBK saddled the chain with debt while cutting back on reinvestment, leaving stores under-maintained and workers complaining of deteriorating conditions.
Earlier this year, allegations surfaced that MBK had mishandled parts of the acquisition process, prompting regulators to launch an on-site inspection and begin sanction proceedings.
The case reignited memories of a 2014 scandal, when Homeplus — then still owned by Tesco — was found to have illegally sold customer data to insurers. The chain has struggled to regain consumer trust ever since, and MBK’s stewardship has done little to restore confidence.
The convergence of the two crises has prompted unusually sharp language from regulators.
At his confirmation hearing this month, Lee Ok-won, chairman of the Financial Services Commission, promised a “thorough investigation into MBK” and pledged to impose tough penalties if serious violations are confirmed.
The scandals are also feeding into a broader policy debate. A report commissioned by the FSC from the Korea Institute of Finance recommended canceling the registration of private equity managers that commit major legal breaches.
The National Assembly’s Science, ICT, Broadcasting and Communications Committee is set to summon MBK Chairman Kim Byung-joo and Lotte Card Chief Executive Cho Jwa-jin on Sept. 24 for questioning over the hack. A separate hearing by the National Policy Committee will focus on the Homeplus controversy.
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