State regulators designate Cho Won-tae as Hanjin Group chairman despite 'internal' dispute

Lim Chang-won Reporter Posted : 2019-05-15 14:38 Updated : 2019-05-15 14:38
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[Courtesy of Hanjin Group]

SEOUL -- South Korea's state anti-trust watchdog designated Korean Air president Cho Won-tae as the head of Hanjin Group despite an unspecified "internal" dispute over who should lead the conglomerate stricken with the sudden death of his father and a string of disgraceful scandals involving the ruling family.

Every year, the Fair Trade Commission (FTC) releases an updated watchlist of large business groups, known as chaebol, with assets of 10 trillion won ($8.4 billion) or more. If there is any change in ownership structure, new group heads should be officially designated.

In Hanjin's case, the commission exercised its authority because Cho Won-tae, 43, failed to send a formal application "due to lack of an internal consensus," Kim Sung-sam, an FTC director overseeing corporate groups, told reporters, refusing to confirm news reports that the delay was caused by a family dispute following the death of his father, Cho Yang-ho, on
April 8.

At the request of regulators, Cho Won-tae belatedly submitted relevant materials, including a self-written signature, to be designed officially as group head, although he was appointed as chairman on April 24 by the board of Hanjin KAL, the group's virtual holding company.

As Hanjin KAL's chairman, Cho Won-tae, was designated as group head who can make decisions on organizational changes, investment and other major affairs even if his overall stake is comparatively small, Kim said.

As the death of his father led to the group's third-generation transfer of leadership in a state of unpreparedness, Cho Won-tae, who joined the group in 2003 and became Korean Air's president in 2017, has a mountain of work to consolidate his group-wide control as Hanjin is under pressure to enhance its corporate governance and transparency in accounting and management.

Like other family-run conglomerates, the Cho family has controlled the group through a complex web of cross-shareholdings. Cho Yang-ho had owned 17.84 percent in the holding company, while his son and two daughters control up to 2.34 percent, respectively.

Hanjin was hit hard by a scandal involving the chairman's youngest daughter, Cho Hyun-min, who allegedly threw a glass cup and sprayed plum juice during a business meeting with advertising agency officials. The scandal fueled public anger, leading to multiple investigations into the chairman, his wife and children on charges of creating a slush fund, evading taxes, bringing in luxury foreign goods illegally, abusing and assaulting company employees and others.