Prosecutors Seek Arrest Warrant for Cho Hyun-beom, Chairman of Hankook Tire, on Charges of Unfair Support to Affiliates, Embezzlement, and Breach of Trust

The prosecution filed an arrest warrant on the 6th against Cho Hyun-bum, chairman of Hankook Tire & Technology (hereinafter Hankook Tire), who is accused of unfairly supporting affiliates and embezzling company funds.

On the same day, the Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Lee Jeong-seop) filed a pre-arrest warrant against Chairman Cho on charges of embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, and violations of the Fair Trade Act.

A prosecution official explained the background for securing Chairman Cho's custody, saying, "Due to the strong pursuit of private interests, the severity of the crime is serious, and there are signs of evidence destruction, so an arrest warrant was requested."

Cho Hyun-beom, Chairman of Hankook Tire.

Chairman Cho is accused of causing damage to the company by lending about 13 billion won of funds from the affiliate Hankook Precision Works (MKT) to Lee Han, a Hyundai Motor Company partner, despite knowing that the management situation of the company was not good during 2020-2021, leveraging his personal friendship with CEO Park Ji-hoon of that company (breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes).

He is also accused of embezzling tens of billions of won of company money around the same period, using it for personal home repairs and purchasing foreign cars (embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes).

The amount of embezzlement and breach of trust by Chairman Cho identified by the prosecution is known to reach the 20 billion won level.

Additionally, Chairman Cho is accused of unfairly supporting MKT by having Hankook Tire purchase tire molds from MKT at prices higher than other manufacturers from 2014 to 2017 (violation of the Fair Trade Act). The prosecution believes that the profits funneled to MKT by Hankook Tire through this method flowed to Chairman Cho and his family members.

MKT is a company in which Hankook Tire holds 50.1%, Chairman Cho holds 29.9%, and his brother Cho Hyun-sik, an advisor at Hankook & Company, holds 20.0% of the shares. From 2016 to 2017, MKT paid dividends totaling 10.8 billion won, including 6.5 billion won to Chairman Cho and 4.3 billion won to Advisor Cho.

In December last year, the prosecution summoned Chairman Cho as a witness for investigation and requested the Fair Trade Commission to file charges against him. Since then, the prosecution has conducted multiple searches of Hankook Tire headquarters, affiliates, and the residences of Chairman Cho and other related parties.

Earlier this year, the prosecution indicted purchasing executive Jeong Mo and the company corporation without detention on charges of unfair support to affiliates.