Chairman Dong-geol Lee: "If Hanjin Kal Does Not Comply with the Agreement, We Will Confiscate, Sell, and Force Resignation"

"Chairman Cho Won-tae's Favoritism? It's Just to Protect 'Jobs'"

[Asia Economy Reporter Kangwook Cho] Lee Dong-geol, chairman of the Korea Development Bank, stated on the 19th regarding Korean Air's acquisition of Asiana Airlines, "If Hanjin KAL does not comply with the seven mandatory conditions, we will confiscate the penalty of 500 billion won, sell the shares, and remove Chairman Cho Won-tae."

At an online briefing held that day, Chairman Lee emphasized in response to controversies over preferential treatment for the Hanjin Group owner family, "If this deal is called preferential treatment, it is preferential treatment to protect jobs."

Regarding the fierce controversy over "preferential treatment for conglomerate heads," he said, "We are fully aware of the criticisms directed at Chairman Cho's family," adding, "Nevertheless, we negotiated with Chairman Cho's side because they are the current management, and everything is aimed at revitalizing the air transportation industry and protecting jobs." He also questioned, "Criticism arises that this is preferential treatment for conglomerates through the injection of public funds, but where in the South Korean economy is there a place not dominated by conglomerates?" and lamented, "If we avoid conglomerates, there is no one to negotiate with."

Chairman Lee further stated, "Because Chairman Cho holds management rights, we negotiated with collateral; if a third-party coalition had management rights, we would have negotiated with them."

Regarding the management rights dispute over Hanjin KAL, he described it as "a never-ending story," saying, "We don't know who will win at the next general shareholders' meeting or the one after that," and warned, "If we wait for the ending, both companies will fail, and then the aviation industry will have to be reorganized." He explained, "Neglecting critical tasks due to the management rights dispute is an evasion of responsibility as a policy bank, so we proceeded with the deal inevitably."

About meetings with not only Chairman Cho but also Kang Sung-bu, the representative of the third-party coalition, he said, "It is true that KDB initiated contact for this deal, but it was not at the instigation or influence of anyone," adding, "However, it was the working-level staff who made contact; I myself have never met Chairman Cho even once." He also explained, "Representative Kang requested a meeting, but since the company is receiving funds from the Industrial Innovation Fund, meeting directly could cause misunderstandings such as secret collusion, so it was arranged for the working-level staff to meet. However, Representative Kang cut off contact, so the meeting did not take place."

Nonetheless, he added, "The third-party coalition cannot be a negotiation party, but if they make proposals for productive purposes, we are always willing to listen."

He also clarified rumors about his connection with Kim Seok-dong, former chairman of the Financial Services Commission and current chairman of Hanjin KAL's outside directors. Chairman Lee said, "We were high school classmates, and from 2003 to 2004, when I was vice chairman of the Financial Supervisory Commission, Kim Seok-dong was director of the Supervisory Policy Bureau, and we worked together for a year and a half," but added, "Since leaving the FSC in September 2004, I have no memory of meeting or calling him. Although he is a good alumnus, we are not close or in contact."

Finally, Chairman Lee emphasized, "This transaction is a matter on which the future fate of South Korea's air transportation industry depends," and said, "It is time to think about how to merge the two companies into a great company, rather than viewing it through political lenses."