South Korea’s flag carrier Korean Air Lines Co. said on Thursday that its chief executive Cho Won-tae - eldest son of Hanjin Group Chairman Cho Yang-ho - will resign from executive positions of the group’s five affiliates in a move to enhance management transparency and efficiency.
Cho and other family members of Hanjin Group will also dispose their shares in the affiliates as part of efforts to wipe out criticism against the group for favoring its own subsidiaries through alleged illicit profiteering.
According to Korean Air, Cho will step down from five positions as chief executive of Hanjin KAL Corp., Jin Air Co., Korea Airport Service, UniConverse Ltd., and Hanjin Information Systems & Telecommunication Co. Cho has been up front in managing overall business of the group’s core units since March 2014 when he became chief executive of Hanjin KAL, the group’s holding company.
Cho will also step down from his registered director positions of all affiliates - except for that of Hanjin KAL.
Shares of Hanjin KAL Corp., the holding entity for Hanjin Group, finished Thursday at 25,900 won, up 100 won or 0.39 percent from the previous session.
Korean Air said that the move comes as part of efforts to have Cho focus more on core business areas and maximize management efficiency and transparency as demanded by the society.
In March 2013, Cho became chief executive of UniConverse, a unit responsible for operating call centers for the airline and establishing network facilities, and in the following year, chief executive of Hanjin Information Systems & Telecommunication. In January, last year, Cho took on the role as chief executive of Korea Airport Service, and in the same year, chief of Jin Air. Early this year, he was promoted to president from vice president of Korean Air, being involved in management up front.
Hanjin Group, meanwhile, said that in addition to Cho stepping down from its executive positions, the owner family will dispose their shares in group affiliates in response to criticism that it is engaged in internal favoring. The conglomerate plans to donate personal shares of UniConverse held by the Cho family to Korean Air. They include shares of group chairman Cho, the younger Cho, the chairman’s two daughters Cho Hyun-ah and Cho Hyun-min.
Hanjin Group plans to sell all of 27 percent shares in Topas Co. held by UniConverse to Hanjin KAL and donate proceeds to Korean Air. Hanjin KAL has 67.4 percent of Topas shares and UniConverse, 27 percent. Korean Air will be responsible for paying related profit tax following the donation. UniConverse will remain as a unit under Korean Air, like Cybersky Co.
In November 2015, Korean Air purchased all shares of Cybersky and incorporated it as its subsidiary after controversy was raised over unfair trading.
In November, last year, the Fair Trade Commission fined 1.43 billion won ($1.27 million) on Korean Air and two affiliates Cybersky and UniConverse for favoring the group’s owner family through irregular business practices and asked the prosecution to open a criminal investigation into Korean Air and its president Cho.
By Kim Jung-hwan
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]