Hanjin Group Chairman Cho Yang-ho’s two children – Cho Won-tae and Cho Hyun-ah -- may face criminal charges for earning profits from illegal inter-subsidiary transactions among Hanjin companies.
The Fair Trade Commission, which has continued a probe into the allegations, will hold a council meeting in September to discuss filing complaints against them.
Cho Won-tae (left) and Cho Hyun-ah
Won-tae, current vice president of Korean Air
, and his elder sister Hyun-ah, former vice president who was sacked in 2014 after the so-called “nut rage” scandal, are suspected to have influenced the air carrier to place orders with two Hanjin affiliates -- Uniconverse, the IT service firm, and Cyber Sky, the in-flight duty-free shop operator.
Over the past five years, the two firms saw 74 percent of their combined sales worth 162 billion won (US$150 million) through their inter-subsidiary trading.
Until last year, the group chairman’s three children, including the youngest Cho Hyun-min, owned a 100 percent stake in Cyber Sky. Amid FTC’s ongoing probe, they sold off their all stake to Korean Air in November.
Inter-unit trading among big family-run conglomerates is not illegal here but is under strict regulatory surveillance as some subsidiaries, in which the owner family holds large stakes, use it to raise their revenue and share price.
The government imposes a fine of less than 200 million won or a jail term of more than three years when a subsidiary with the owner family’s shareholding exceeding 30 percent sees more than 20 billion won or 12 percent of its total revenue from transactions with other sister firms.
By Lee Ji-yoon (firstname.lastname@example.org