Hanjin Group scions Cho Hyun-ah (L) and Cho Won-tae (R). (image: Korean Air Lines)
SEOUL, Jan. 20 (Korea Bizwire) – The heiress of South Korean airline-focused conglomerate Hanjin Group, widely known for the “nut rage” incident in 2014, has come under the spotlight again in what appears to be a fresh twist to a family feud brewing over the group’s throne.
The family feud first came to light in late December when Cho Hyun-ah, the eldest daughter of late Hanjin Group and Korean Air Lines Chairman Cho Yang-ho, lashed out at her younger brother Cho Won-tae, chairman of the airline-to-logistics conglomerate and the national flag carrier, for not heeding their father’s wish in the way of managing the group.
The 45-year-old heiress claimed that her brother, 44, was appointed to the top post without sufficient discussions among family members after their father’s death in April and has been making management decisions without prior consultations.
Early this month, Hyun-ah reportedly met with the head of local activist fund Korea Corporate Governance Improvement (KCGI) and midsized builder Bando Engineering & Construction Co. — the single largest shareholder and the No. 3 shareholder, respectively — for “possible cooperation” ahead of a general shareholders’ meeting in March, when Won-tae seeks to be reelected as head of Hanjin Group.
No details are known about the possible cooperation.
Hanjin Group said they cannot confirm the meetings. KCGI and Bando could not be reached for comment.
The meeting has raised speculation that she could try to join hands with KCGI and Bando in order to oppose her brother’s reappointment.
The Cho family and other relatives together hold a 28.93 percent stake in Hanjin KAL, the holding company of Hanjin Group. Hyun-ah owns a 6.49 percent stake and Won-tae holds a 6.52 percent stake, with their younger sister Cho Hyun-min and mother Lee Myung-hee controlling 6.47 percent and 5.31 percent, respectively.
KCGI is the biggest shareholder with a stake of 17.29 percent in Hanjin KAL, followed by Delta Air Lines Inc. with 10 percent, Bando with 8.28 percent and the National Pension Service (NPS), South Korea’s state pension fund, with 4.11 percent.
It remains to be seen whether KCGI will team up with Hyun-ah or not as it has strongly demanded an improvement in the group’s governance structure and financial status, and its founding family members’ irregularities have dragged down prices of group affiliates, such as Korean Air.
In November, KCGI asked for a meeting with Delta Air Chief Executive Ed Bastian to join forces to monitor Hanjin’s efforts to enhance its governance structure.
Earlier, KCGI also demanded a Seoul court designate an auditor to review the process by which Hanjin KAL’s board appointed the late chairman’s only son Won-tae as new chairman of the group in April.
Among major stakeholders, Bando also has emerged as a deciding vote in a possible battle between Hyun-ah and Won-tae over managerial control of Hanjin Group as it recently announced it will participate in management of the group after raising its Hanjin KAL stake to 8.28 percent early this month from 6.28 percent in November.
Korean Air headquarters in Seoul. (image: Korean Air)
Meanwhile, Delta has been regarded as friendly as the U.S. carrier said its stake investment in Hanjin KAL is aimed at strengthening business ties, not at affecting management rights.
In 2018, Delta and Korean Air formed a joint venture to collaborate on the industry’s most robust trans-Pacific routes, providing customers with access to more than 290 U.S. destinations and over 80 in Asia.
To be reappointed in March, Won-tae is required to take concrete action to improve the group’s governance structure and roll out business plans ahead of the planned shareholders meeting, analysts said.
“The chairman has yet to present any detailed action plans to enhance the group’s corporate value as he has been engaged in the family feud and issues involving inheritance from his late father,” Lee Sang-heon, an analyst at HI Investment & Securities Co., said.
In November, Hanjin KAL’s board of directors took initial steps by setting up the governance committee and the compensation committee under its wing as part of its broader efforts to improve its governance structure.
The governance committee will conduct a feasibility study on management issues directly related to shareholder value before a decision is made and review the legality of transactions between affiliates, Hanjin said.
Hanjin’s family scandal began in 2014 when the infamous nut rage incident made global headlines.
Back then, Hyun-ah forced a Korean Air flight back to the boarding gate at a New York airport because she lost her temper over the way she was served nuts in first class — in an unopened bag instead of on a plate.
In March 2018, Hyun-ah, former vice president of the group’s flagship Korean Air, came back as head of KAL Hotel Network Co., the hotel affiliate of Hanjin Group.
But she was dismissed from the post a month later, along with Cho Hyun-min, 37, who was accused of throwing water in the face of an ad agency manager during a meeting in March 2018.
Hyun-ah may want to make a comeback as a board member and participate in the group’s management, but she may not object to her brother heading the group, analysts said.
In June last year, Hyun-min returned as senior vice president and chief marketing officer of the holding company as she was cleared of any charges.
(Yonhap)
