South Korea’s National Pension Service (NPS) expressed its intention to actively exercise its shareholder rights over Hanjin Group as the owner family’s string of power abuse scandals have tarnished the corporate name and taken a heavy toll on its market value.

In a rare public reprimand against a specific company, the expert committee of NPS said Tuesday “the disruptive acts of the owner family of Korean Air Lines and Hanjin Kal could heighten business risks and unpredictability, which could hurt the fund’s long-term profitability” and urged the group to “come up with effective measures to improve corporate management.”

The NPS is the second-biggest shareholder of Korean Air Lines, the country’s largest full-service carrier, and Hanjin Kal, the holding entity of Hanjin Group, with a 12.45 percent and 11.81 percent stake, respectively.

As Korea’s largest institutional investor, its ownership in the two companies is solely for investment purposes so it is unlikely it would pursue drastic changes. But analysts say the recent statement signals the fund’s strong intention to be more vocal in pushing for a management shake-up should the proposal arise in shareholder meetings.

“Given the wide public concern over Hanjin Group’s abuse of power, we felt it was necessary to come up with a more solid, effective plan to address the issue,” said a NPS official.

In April, Cho Hyun-min, the youngest daughter and former vice president of Korean Air, was questioned over charges that she threw a cup of water at an advertising executive in a fit of anger. Cho Hyun-ah, her older sister, was also involved in the so-called “nut rage” scandal in 2014 when she forced a plane to return to the gate because she was upset with the way her nuts were served. Their mother has recently been charged of habitually abusing her household staff and throwing violent tantrums. The family is also being investigated on accusations of smuggling, tax evasion and embezzlement.

By Yoo Joon-ho and Kim Hyo-jin

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