Hanjin Group heiress Cho Hyun-min’s sneak back to management has upset shareholders and employees as the company struggles to restore credibility of Korea’s flag carrier against the never-ending scandals of the owner family members.
Cho Hyun-min, the youngest daughter who had shamed her late father Hanjin Group Chairman Cho Yang-ho as well as the corporate name, was reinstated Monday as senior vice president at Hanjin Kal Corp., the group’s holding entity, after nearly a year in corporate exile following a series of exposures about her fiery temper and ill treatment of employees and business associates.
Shares of Hanjin Kal have been skidding on the news of her return on Monday. From last Friday, shares fell nearly 10 percent from 45,000 won ($38) to 40,450 won Wednesday.
Although she was cleared of criminal charges for throwing water at an advertising agency manager in an angry outburst, the damage on the Hanjin name has never been fully restored, claimed KCGI, an activist fund that owns the largest stake in Hanjin Kal apart from the founding family.
Last year, Cho also lost her post as senior vice president at Jin Air Co., a budget affiliate of Korean Air Lines Co., after it was found that Cho, a U.S. citizen, served as a board director in violation of Korean aviation law.
KCGI issued a public statement condemning Cho’s comeback, referring to Cho in her English name Emily as a reminder of her role in putting the budget carrier at risk of losing its license. The Seoul-based activist fund has been upping its share in the holding entity and becoming increasingly vocal in its push for improved governance since taking up a 9 percent stake in it late last year. It now holds a 15.84 percent stake in the company.
KCGI questioned the board’s reappointment of Cho, saying that her misconduct has caused severe damage to the group both socially and financially.
Nearly one-fifth of the market value of Hanjin’s five major affiliates, including Korean Air, Hanjin Kal and Jin Air, was wiped out over the six months after the news of Cho’s “water rage” incident was made public in April 2018, the fund noted.
It also asserted that Cho’s board seat at Jin Air had nearly cost the country’s second-largest budget carrier its operating license. While Jin Air kept its license, it has been placed under strict sanctions for the past year that hampered its ability to register new routes or add aircraft.
Hanjin Group employees also balked at Cho’s return. The labor union of Korean Air pilots in a statement on Tuesday called for Cho’s dismissal, saying the company is still “suffering from the financial blow not to mention low employee morale” and that “abuses of power are likely to continue.”
Hanjin Group said Cho was reappointed in due procedure under internal rules and that her experience as a marketing expert at Korean Air and Jin Air would be a valuable asset to the company.
Boding more bad news for the Cho family who had recently lost their patriarch, Cho Hyun-ah, the eldest daughter notorious for her nut rage, and her mother Thursday were fined and sentenced to suspended jail terms for smuggling luxury goods via the company fleet.
By Park Yun-gu and Kim Hyo-jin
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]