[Courtesy of Korean Air]
The 41-year-old son of Hanjin Group patriarch Cho Yang-ho will abandon his group-wide control by giving up executive posts at Korean Air and other affiliates for transparent corporate governance throughout the family-run conglomerate.
Cho and his children will also donate their stake in Uniconverse, the unlisted affiliate of Korean Air, so that the country's top airline could be run in a transparent and efficient way, the group said.
The surprise decision that virtually put the break on the group's third-generation transfer of leadership came after Kim Sang-jo, designated by President Moon Jae-in as an advance guard for reforming South Korea's family-run conglomerates known as chaebol, took office as chairman of the Fair Trade Commission (FTC), a state anti-trust watchdog.
Kim vowed to work hard for stopping chaebol's unfair business activities and urged chaebol to enhance corporate governance and protect the interests of minority shareholders. Moon has described chaebol's unfair business practices as "old evils" that should be eradicated.
Last November, the commission ruled that Korean Air and two affiliates -- Uniconverse and CyberSky -- were involved in inter-subsidiary transactions to provide illegal gains to the group's ruling family.
Cho Yang-ho and his three children had controlled a 100 percent stake in the two units which are suspected of securing illegal gains through "preferred" contracts with Korean Air. Uniconverse is a telecom service provider while CyberSky publishes Korean Air's promotional magazines and operate an online duty-free shop.
The commission has investigated alleged illegal business practices and the dynastic transfer of leadership. Like other tycoons, the Cho family has controlled the group through a complex web of cross-shareholdings.
The Hanjin group patriarch has stepped up a third-generation succession since his daughter, Cho Hyun-Ah, resigned as Korean Air's vice president after a "nut rage" incident in December 2014 that tarnished the group's reputation.
Last year, the patriarch's only son, Cho won-tae, and his youngest daughter, Cho Hyun-min, have secured key posts in Korean Air and other units. The group said that after standing down as Korean Air president, the son will focus on an "efficient" business area without disclosing details.
Cho Yang-ho, who is also the chairman of Korean Air, has been under pressure to restructure his group since Hanjin Shipping, which used to be South Korea's largest container carrier, was put under a rehabilitation plan due to falling freight rates stemming from an oversupply of ships and a protracted slump in the global economy.
Hanjin Shipping, which had been kept afloat with an injection of money from its largest shareholder, Korean Air, and other units, was finally liquidated in February after its court receivership last year triggered chaos in its global cargo traffic.
Hanjin's move followed the arrest of Samsung Electronics vice chairman Jay Y. Lee, the de facto leader of South Korea's largest conglomerate, Samsung Group, in February for providing bribes in an attempt to facilitate the succession of group leadership from his bedridden father. Lee is on trial for donating cash to entities controlled by the crony of ex-president Park Geun-hye.
Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
