[Yonhap Photo]
A three-way alliance was announced on Friday by Cho Hyun-ah, KCGI and Bando Engineering & Construction, which together hold more than 30 percent of shares in Hanjin-KAL, the holding company of Hanjin Group. They agreed to vote together against Hanjin's new chairman Cho Won-tae, 44, at a meeting of shareholders in March.
Cho Hyun-ah, 45, and her partners revealed their clear intention to expel the new chairman, who officially took the helm in May last year to succeed his late father, saying the group should be run by professional managers to improve its governance structure and enhance the interests of ordinary shareholders.
"The current management situation of Hanjin Group, including Korean Air, is in a serious crisis and it cannot be improved by the current management. We shared the view that it is necessary to enhance shareholder value by reforming the existing management style, improving the financial structure and streamlining management, including the introduction of a professional management system," they said in a joint statement.
"At the upcoming shareholders' meeting of Hanjin KAL, we agreed to actively cooperate in activities for the growth and development of Hanjin Group, such as exercising voting rights and offering shareholder proposals."
The ill-matched alliance is powerful enough to sway the leadership of Cho Won-tae who needs help from his family to win confidence from shareholders. The Cho family and other relatives together hold a 28.93 percent stake shared almost equally by the new chairman, two sisters and their mother.
KCGI, the country's first activist equity fund, is the biggest single shareholder with 17.3 percent, followed by Delta Air Lines with 10 percent. Bando holds 8.28 percent and the National Pension Service (NPS), a state pension fund, owns 4.11 percent. Delta has been among friendly shareholders, while KCGI has spearheaded a campaign against the Cho family.
"We will make every effort to strengthen Hanjin Group`s professional management system and board-oriented management so as to establish an exemplary governance structure that can enhance the interests of ordinary shareholders who have been excluded and realize common interests of shareholders without being swayed by the individual interests of any particular shareholder," Hyun-ah and her partners said.
The first sign of revolt came on December 23, when Hyun-ah openly criticized her brother for running the group without prior consultations with family members.
Hanjin has been hit hard by a series of scandals since the new chairman's younger sister, Cho Hyun-min, threw a glass cup and sprayed plum juice during a business meeting with advertising agency officials. The incident fueled public anger, leading to multiple investigations into the late chairman, his wife and children on charges of creating a slush fund, evading taxes, bringing in luxury foreign goods illegally, abusing and assaulting company employees and others.
Cho Hyun-ah was charged with having smuggled goods through an airport clearance desk for Korean Air. However, a court handed down a suspended jail sentence in June, clearing legal obstacles to her comeback as a Hanjin group executive.
Cho Hyun-ah became enraged in December 2014 when a flight attendant served her some nuts in a bag on board a flight that was forced back to the gate while taxiing to the runway. She was given a prison sentence on conviction of violating aviation safety laws, but an appeals court suspended her sentence in May 2015. In March last year, she came back to head Hanjin's hotel business unit, KAL Hotel Network, but she lost her title again due to a scandal caused by her sister.
Cho Hyun-min came back as Hanjin KAL's executive director and a vice president of Jungseok Enterprise, a real estate management arm of the group, 14 months after she stood down as Korean Air's executive director.
reporter
Lim Chang-won
cwlim34@ajunews.com
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