'Naewoo Oehwan' Jo Won-tae

Speculation on Tri-Party Meeting Among Cho Hyun-ah, KCGI, and Bando... Degree Controversy Resurfaces

[Image source=Yonhap News]

[Asia Economy Reporter Yoo Je-hoon] Cho Won-tae, chairman of Hanjin Group, is struggling with consecutive internal and external crises. The management dispute is escalating as Cho Hyun-ah, former vice president of Korean Air who has rebelled, shows signs of allying with external forces, and recently, controversies over Cho Won-tae's academic degree have further damaged his leadership.

According to the industry on the 17th, the Central Administrative Appeals Commission of the Anti-Corruption and Civil Rights Commission dismissed the administrative appeal filed by the Jungseok Inha Foundation against the Ministry of Education's decision to revoke Chairman Cho's bachelor's degree from Inha University. Previously, the Ministry of Education notified the school of degree cancellation, citing irregularities in the process when Chairman Cho transferred to Inha University in 1998. The Jungseok Inha Foundation filed the administrative appeal, a preliminary step before administrative litigation, arguing that the decision was unjust.

Of course, the Jungseok Inha Foundation has expressed its intention to appeal the administrative appeal result, stating, "We plan to seek a judicial ruling." However, the industry is concerned that this incident could be a significant negative factor for Chairman Cho, who needs to be reappointed as an inside director of Hanjin KAL ahead of the regular shareholders' meeting in March.

Currently, the shareholder composition of Hanjin KAL is such that no single entity can independently pass proposals for inside director appointments, with Cho and related parties holding 28.93%, private equity fund (PEF) KCGI holding 17.29%, Delta Air Lines 10.00%, and Bando Construction 8.28%. With the positions of other family members and major shareholders unclear, it is interpreted that institutional investors, including the National Pension Service (NPS) with 4.11%, whose influence was strengthened last year through the 'Active Shareholder Rights Exercise Guidelines,' could also affect the outcome. In fact, last year, the late Cho Yang-ho, father of Chairman Cho, saw his reappointment proposal rejected at the Korean Air shareholders' meeting due to opposition votes from external shareholders such as the NPS.

Meanwhile, rumors of a tripartite meeting among former Vice President Cho, KCGI, and Bando Construction have recently circulated. The side of former Vice President Cho stated at the end of last year, when initiating the management dispute, that they would "listen to and consult with various shareholders (including KCGI and Bando Construction)."

Of course, since the goals of former Vice President Cho, KCGI, and Bando Construction differ, it is uncertain whether they will attempt an alliance. For example, former Vice President Cho seeks management participation in the hotel business division, while KCGI is considering improving financial structure by restructuring unprofitable businesses such as hotels, indicating their interests do not exactly align.

However, the combined Hanjin KAL shares held by these three parties amount to 32.06%, which could surpass the combined shareholding of Chairman Cho and his allies (Delta Air Lines, group-affiliated foundations, etc.), posing a considerable concern for Chairman Cho. Especially if his mother, Lee Myung-hee, advisor of Jungseok Enterprise (5.31%), who clashed with him at the end of last year, sides with former Vice President Cho, the gap could widen further.

An industry insider said, "In the case of Hanjin KAL, external forces aiming for capital gains hold more shares than small shareholders, so the landscape could change depending on alliances among major shareholders or institutional investors," adding, "From Chairman Cho's perspective, various carrots and sticks will likely be alternately presented until the next shareholders' meeting."